Water Act 2003

(59A) (1) The following licences— (a) a full licence; (b) a transfer licence; or (c) a licence to obstruct or impede the flow of inland waters by means of impounding works, may be transferred by the holder of the licence to another person (“the transferee”) in accordance with the following provisions of this section. (2) The holder and the proposed transferee shall give notice (a “transfer notice”) to the Agency of their agreement that the licence should be transferred. (3) The transfer notice shall include— (a) such information as the Agency reasonably requires; and (b) (in the case of the transfer of a full licence or of a transfer licence) a declaration by the proposed transferee that— (i) he has, or at the time when the proposed transfer is to take effect will have, a right of access in relation to each point of abstraction; and (ii) he will continue to have such a right for the period of at least one year beginning with the date on which the proposed transfer is to take effect, or until the licence is to expire (if sooner), and may specify the date on which the holder and the transferee wish the transfer to take effect. (4) If the holder is a person in whom the licence has vested under section 59B below, a transfer notice shall be of no effect unless the notice required by section 59B(4) has been given. (5) Subject to subsection (4) above, if the Agency receives a transfer notice which complies with the requirements of subsections (2) and (3) above, the Agency shall amend the licence by substituting the name of the transferee as holder of the licence. (6) The transfer shall take effect— (a) from the date on which the Agency amends the licence; or (b) from the date specified in the transfer notice, if later. (7) Nothing in this section shall affect the liability of the holder of the licence for any failure by him, before the transfer took effect, to comply with any condition or requirement of that licence. (8) In this section— - “point of abstraction” means a place where the licence authorises water to be abstracted from inland waters or (as the case may be) a place consisting of or comprising underground strata from which the licence authorises water to be abstracted; and - “right of access” means, in relation to a point of abstraction, a right of access to land of the kind referred to in subsection (2)(a) or, as the case may be, (3)(a) of section 35 above; and references to a person who will have such a right of access shall be construed in accordance with that section (including subsections (4) to (6)). (59B) (1) On the death of the holder of a licence under this Chapter, the licence shall be regarded as property forming part of the deceased’s personal estate, whether or not it would be so regarded apart from this subsection, and shall accordingly vest in his personal representatives. (2) If a bankruptcy order is made against the holder of a licence under this Chapter, the licence shall be regarded for the purposes of any of the Second Group of Parts of the Insolvency Act 1986 (insolvency of individuals; bankruptcy) as property forming part of the bankrupt’s estate, whether or not it would be so regarded apart from this subsection, and shall accordingly vest as such in the trustee in bankruptcy. (3) A person in whom a licence vests under this section shall become the holder of the licence, in place of the prior holder, from the date of the vesting. (4) Where a licence other than a temporary licence vests in any person under this section, that person shall give notice of that fact to the Agency not later than the end of the period of fifteen months beginning with the date of the vesting. (5) If— (a) a licence vests in any person under this section; but (b) that person fails to give the notice required by subsection (4) above within the period mentioned there, the licence shall cease to have effect. (59C) (1) The holder of a full licence or of a transfer licence (the “old licence”) may apply to the Agency for the division of the holder’s right to abstract water in accordance with the old licence and for the transfer— (a) to another person of part, or to a number of other persons of parts not amounting to the whole; or (b) to a number of other persons of parts amounting in all to the whole, of that right. (2) The holder of the old licence and any person proposing to carry on a part of the abstraction authorised by the old licence in place of the holder (a “successor”) shall give notice to the Agency of their agreement to the division and transfer (an “apportionment notice”). (3) The apportionment notice shall, in relation to the abstraction authorised by the old licence— (a) specify, for each proposed successor, what quantity of water he proposes to abstract, and (if the holder of the old licence is to continue the abstraction in part) what quantity of water he proposes to abstract; (b) specify the purpose or purposes for which those persons referred to in paragraph (a) above who would require a new licence granted under subsection (5) below would abstract water (being one or more of the purposes for which abstraction is authorised under the old licence); (c) specify the point (or points) of abstraction from which it is proposed that the persons referred to in paragraph (a) above would abstract water (being one or more of the points from which abstraction is authorised under the old licence); (d) include a declaration by each of those persons who requires a licence under this Chapter in order to carry on the abstraction that— (i) he has, or at the time when the proposed grant to him of a new licence under subsection (5) below is to take effect will have, a right of access in relation to each such point of abstraction; and (ii) he will continue to have such a right for the period of at least one year beginning with the date on which the new licence is to take effect, or until it is to expire (if sooner); and (e) include such other information as the Agency reasonably requires, and may specify the date on which the holder and the successor (or successors) wish the division and transfer (or transfers) to take effect. (4) The apportionment notice shall be accompanied by an application on the part of the holder of the old licence for its revocation. (5) Subject to subsection (9) below, if the Agency receives an apportionment notice and the application for revocation referred to in subsection (4) above, the Agency shall— (a) revoke the old licence; (b) if the holder is to continue the abstraction in part and a licence is required under this Chapter for that purpose, grant to the holder of the old licence a licence relating to that part of the abstraction; and (c) grant to each successor who requires a licence under this Chapter in order to carry on his part of the abstraction a licence relating to that part of the abstraction. (6) Sections 34 to 45 above shall not apply to the grant of a new licence under subsection (5) above. (7) Subject to section 46 above and to any provision of regulations made under section 59D(1) below, each new licence to be granted under subsection (5) above shall be granted subject to provisions which correspond as nearly as practicable to those of the old licence in relation to the part of the abstraction to be authorised by the new licence. (8) The revocation of the old licence and the grant of the new licences shall take effect— (a) from the date on which the Agency revokes the old licence and grants the new ones; or (b) from the date specified in the apportionment notice, if later. (9) The Agency shall not grant a new licence to the holder of the old licence or to a successor if, by virtue of an exemption, the restriction on abstraction would not apply to that part of the abstraction proposed in relation to him in the apportionment notice. (10) For the purposes of this Chapter, a person (whether the holder of the old licence or a successor) who proposes to carry on a part of the abstraction in the circumstances mentioned in subsection (9) above shall, if the old licence was a full licence, be taken to have the right to do so in relation to that part, subject to subsection (11) below. (11) For the purposes of this Chapter, a person shall cease to be taken to have a right, by virtue of subsection (10) above, to carry on an abstraction if— (a) during a period mentioned in subsection (12) below that person does not carry out any such abstraction; or (b) following an order under section 27A(1) above or regulations under section 33A above, that person is granted a full licence in respect of abstraction from the same point. (12) The period referred to in subsection (11)(a) above is— (a) four years; or (b) if the abstractions authorised under the old licence were abstractions planned to be carried out at intervals of more than four years, or abstractions for emergency purposes only, such longer period as the Agency may determine on the application of the person in question. (13) For the purposes of section 39A above, a new licence granted under subsection (5) above shall be treated— (a) as if it had been granted at the time the old licence was granted; and (b) as if it and any other new licence granted by virtue of the relevant apportionment notice had been granted in place of the old licence. (14) In this section— - “exemption” means the disapplication of the restriction on abstraction under or by virtue of section 27 or 33A above; and - “point of abstraction” and “right of access” have the same meanings as in section 59A above. (59D) (1) The Secretary of State may make regulations about the provisions to be contained in licences granted under section 59C above. (2) Nothing in section 59C above shall affect the liability of the holder of the old licence for any failure by him, before the revocation of that licence took effect, to comply with any condition or requirement of that licence. (3) If the holder of the old licence is a person in whom the old licence has vested under section 59B above, an apportionment notice shall be of no effect unless the notice required by section 59B(4) has been given. (4) In this section, “apportionment notice” and “old licence” have the same meanings as in section 59C above.

• (2) In section 47 of the WRA (holders of licence)—

• (a) for subsection (2) there is substituted—

(2) The person to whom a licence under this Chapter is granted to abstract water or to obstruct or impede any inland waters is the holder of the licence for the purposes of this Act, subject to sections 59A to 59C and 67 below.

,

• (b) subsection (3) is omitted.

• (3) In section 189 of the WRA (register of abstraction and impounding licences), in subsection (1)(b), for the words from “section 49” to the end there is substituted “ section 59A, 59B or 59C above ”.

• (4) Sections 49 and 50 of the WRA (which relate to the succession to licences to abstract water) shall cease to have effect.

• (5) Subsection (4) does not affect the succession to a licence to abstract water where the death or other act or event referred to in section 49(2)(a) or 50(1)(a) or (b) of the WRA occurred before the coming into force of that subsection, and section 49 of the WRA or (as applicable) any regulations under section 50 of the WRA which were in force immediately before the coming into force of subsection (4) are to continue to have effect in relation to such a case despite the repeal of the applicable section.

Claims and compensation

Claims arising out of water abstraction

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• (1) After section 48 of the WRA there is inserted—

(48A) (1) Subject to subsection (7) below and to section 79 (including that section as applied by section 79A(9)) below, a person who abstracts water from any inland waters or underground strata (an “abstractor”) shall not by that abstraction cause loss or damage to another person. (2) A person who suffers such loss or damage (a “relevant person”) may bring a claim against the abstractor. (3) Such a claim shall be treated as one in tort for breach of statutory duty. (4) In proceedings in respect of a claim under this section, the court may not grant an injunction against the abstractor if that would risk interrupting the supply of water to the public, or would put public health or safety at risk. (5) Except as provided in this section, no claim may be made in civil proceedings by a person (whether or not a relevant person) against an abstractor in respect of loss or damage caused by his abstraction of water. (6) Nothing in this section prevents or affects a claim for negligence or breach of contract. (7) This section does not apply, and no claim may be brought under this section, where the loss or damage is caused by an abstractor acting in pursuance of a licence under this Chapter and is loss or damage— (a) in respect of which a person is entitled to bring a claim under section 60 below (or would be so entitled if there were a breach of the duty referred to in that section); (b) in respect of which a person would have been entitled to bring a claim under section 60 below but for an express provision (including, for example, section 39(1A) above and section 59C(6) below) disapplying that duty; or (c) constituting grounds on which a person is entitled to apply to the Secretary of State under section 55 below (or would be so entitled but for subsection (2) of that section) for the revocation or variation of that licence, but without prejudice to the application of section 48 above.

• (2) In section 48 of the WRA (general effect of licence), in subsection (2), after “supply” there is inserted “ (other than an abstraction in respect of which a claim could be brought under section 48A below, in which case that section shall apply) ”.

• (3) In relation to loss or damage suffered before the coming into force of this section—

• (a) section 48A of the WRA inserted by subsection (1) of this section does not apply, and

• (b) section 48 of, and paragraphs 1(2) and 2 of Schedule 7 to, the WRA continue to have effect as if subsection (2) of this section were not in force.

Compensation for modification of licence on direction of Secretary of State

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• (1) Section 61 of the WRA (compensation where licence modified on direction of the Secretary of State) is amended in accordance with subsections (2) and (3).

• (2) In subsection (4), for “seven” there is substituted “ four ”.

• (3) After subsection (4) there is inserted—

(4A) No compensation shall be payable under this section in respect of the variation of a full licence, or of a transfer licence which specifies a minimum value under section 46(2A) above, so as to reduce the quantity of water which the holder of the licence is authorised by the licence to abstract from the source of supply to which the licence relates if— (a) the ground for varying the licence is that the Secretary of State is satisfied that the variation is necessary in order to protect the availability of water in the source of supply to which the licence relates; (b) the variation does not reduce the quantity of water which the holder of the licence is authorised by the licence to abstract to less than the minimum value specified in the licence under section 46(2A) above for the purposes of this subsection; and (c) the conditions set out in subsection (4B) below are satisfied. (4B) Those conditions are that— (a) the licence was granted after the coming into force of section 19 of the Water Act 2003; (b) the variation is made no sooner than the end of the period of six years beginning with the date on which the licence took effect; and (c) the variation takes effect no sooner than the end of the period of six years beginning with the date of the variation.

• (4) The amendment made by subsection (2) has effect in relation to the revocation or variation of a licence only if the period referred to in section 61(4) of the WRA during which no water was abstracted in pursuance of the licence began after the coming into force of that subsection.

Recovery of compensation from new licence-holder

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After section 61 of the WRA there is inserted—

(61A) (1) This section applies where compensation has been paid under section 61 above to the holder of a licence (“licence A”) following its revocation, and— (a) the holder of licence A was a water undertaker; (b) at the time of the revocation an application from a qualifying person for a licence to abstract water (“licence B”) was outstanding; (c) if the Agency had granted licence B while licence A still had effect, the Agency would have been in breach of the duty imposed on it by section 39(1) above owed to the holder of licence A; (d) the ground for revoking licence A was that the Agency was of the view that in the interests of greater efficiency in the use of water resources it would be better for licence B to be granted and licence A revoked; and (e) the Agency proposes to grant licence B. (2) If this section applies, the Agency may (if licence B is granted) recover from the qualifying person the amount of the compensation referred to in subsection (1) above (or such lesser amount as the Agency determines). (3) Subsection (6) of section 41 of the 1995 Act (which confers powers to make schemes imposing charges) shall apply to the amount referred to in subsection (2) above as if it were a charge due and payable to the Agency in respect of the subsistence of licence B. (4) In this section, “qualifying person” means— (a) a water undertaker; or (b) a person who has made an application for an appointment or variation replacing a company as a water undertaker under section 8 of the Water Industry Act 1991 which has not been determined.

Withdrawal of compensation for certain revocations and variations

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• (1) This section applies where—

• (a) a licence to abstract water is revoked or varied on or after 15th July 2012 in pursuance of a direction under section 54 or 56 of the WRA (which provide for the Secretary of State to direct the appropriate agency to revoke or vary a licence in certain circumstances);

• (b) the licence was granted before the coming into force of section 19 of this Act;

• (c) the licence is one which is expressed to remain in force until revoked; and

• (d) the ground for revoking or varying the licence is that the Secretary of State is satisfied that the revocation or variation is necessary in order to protect from serious damage—

• (i) any inland waters,

• (ii) any water contained in underground strata,

• (iii) any underground strata themselves,

or any flora or fauna dependent on any of them.

• (2) Where this section applies, no compensation is payable under section 61 of the WRA in respect of the revocation or variation of the licence.

• (3) Expressions used in sub-paragraphs (i), (ii) and (iii) of subsection (1)(d) are to be construed in accordance with section 221 of the WRA; and “waters”, in relation to a lake, pond, river or watercourse which is for the time being dry, includes its bottom, channel or bed.

• (4) This section does not apply in respect of a licence revoked or varied on or after 1 January 2028 if the licence is a “relevant licence” within the meaning of section 61ZA of the Water Resources Act 1991.

Water resources management schemes

Water resources management schemes: other abstractors

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After section 20 of the WRA there is inserted—

(20A) (1) The Agency may enter into and maintain such arrangements with holders of abstraction licences other than water undertakers for securing the proper management or operation of— (a) the waters from which they have the right by virtue of their licences to abstract water; and (b) any reservoirs, apparatus or other works which are used for the purposes of or in connection with their abstractions and which belong to them, are operated by them or are otherwise under their control, as the Agency from time to time considers appropriate for the purpose of carrying out its functions under section 6(2) of the 1995 Act. (2) Without prejudice to the power of the Agency and any holder of an abstraction licence to include any such provision as may be agreed between them in arrangements under this section, such arrangements may— (a) make provision by virtue of subsection (1)(a) above with respect to the construction or installation of any reservoirs, apparatus or other works which the holder of the licence will use for the purposes of or in connection with his abstraction; (b) contain provision requiring payments to be made by the Agency to the holder of the licence; and (c) require the reference to and determination by the Secretary of State or the Water Services Regulation Authority of questions arising under the arrangements. (3) The Agency shall send a copy of any arrangements entered into by it under this section to the Secretary of State. (4) In this section, references to abstraction licences are to licences under Chapter 2 of this Part to abstract water.

Water resources management schemes: referral to Secretary of State

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• (1) After section 20A of the WRA (inserted by section 28) there is inserted—

(20B) (1) This section applies where— (a) the Agency has sought to enter into arrangements acceptable to it under section 20 or 20A above, but is satisfied that the other party is unwilling to enter into such arrangements or to do so on terms appearing to the Agency to be reasonable; or (b) having entered into such arrangements, the Agency has sought to renew or vary them but is satisfied that the other party is unwilling to do so or to do so on terms appearing to the Agency to be reasonable. (2) Where this section applies, the Agency may refer to the Secretary of State the question (as the case may be)— (a) whether such arrangements should be entered into, and if so, on what terms; or (b) whether the arrangements should be renewed or varied (as the case may be), and if so, on what terms. (3) If the Secretary of State determines that arrangements should be entered into or (as the case may be) renewed or varied, such arrangements on the terms determined by the Secretary of State shall be enforceable— (a) by civil proceedings by the Secretary of State for an injunction or for any other appropriate relief; and (b) where the other party is a water undertaker, also under section 18 of the Water Industry Act 1991 (enforcement orders) by the Secretary of State. (4) The functions of the Secretary of State under subsection (2) above shall be treated for the purposes of section 114 of the 1995 Act (delegation or reference of appeals) as if they were functions to which paragraph (a) of subsection (1) of that section applied.

Enforcement

Enforcement notices, and related procedures and offences

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After section 25 of the WRA there is inserted—

(25A) (1) Subject to the following provisions of this section, where it appears to the Agency that a person is— (a) in breach of section 24(1) or (2) or section 25(1) above; or (b) for the purposes of section 24 or 25 above a holder of a licence under this Chapter and has not complied with a condition or requirement imposed by the provisions, as for the time being in force, of that licence, the Agency shall be entitled to serve an enforcement notice on him if the condition in subsection (2) below is satisfied. (2) The condition is that it appears to the Agency that the breach or failure to comply is causing or is likely to cause significant damage to the environment. (3) An enforcement notice is a notice requiring the person on whom it is served— (a) to cease his breach of section 24(1) or (2) or section 25(1) above, or to comply with the condition or requirement in question; and (b) to carry out any works or operations specified in the notice. (4) The works or operations which may be specified are works or operations which it appears to the Agency are appropriate for the purpose of remedying or mitigating the effects of the breach or failure to comply, and may include— (a) works or operations for the purpose, so far as it is reasonably practicable to do so, of restoring any affected waters, including any flora and fauna dependent on them, to their state immediately before the breach or failure to comply; and (b) in the case of a breach of section 25(1) above, the removal of any unauthorised impounding works or the reversal of any unauthorised alteration to impounding works. (5) An enforcement notice must specify the periods within which the person on whom it is served must do each of the things specified in the notice. (6) Before serving an enforcement notice on any person, the Agency shall take reasonable steps to consult that person about the works or operations which are to be specified in the notice. (7) The Secretary of State may by regulations make provision for or in connection with— (a) the form or content of enforcement notices; (b) requirements for consultation, before the service of an enforcement notice, with persons other than the person upon whom the notice is to be served; (c) steps to be taken for the purposes of any consultation required under subsection (6) above or regulations made by virtue of paragraph (b) above; (d) any other steps of a procedural nature which are to be taken in connection with, or in consequence of, the service of an enforcement notice. (8) An enforcement notice is not invalid, or invalidly served, merely because of a failure to comply with subsection (6) above or with regulations made by virtue of subsection (7)(b) above. (9) The Secretary of State may, if he thinks fit in relation to any person, give directions to the Agency as to whether or how it should exercise its powers under this section. (10) In proceedings for any offence under section 24 or 25 above against a person upon whom an enforcement notice has been served, the following are not to be taken as evidence that he has committed the offence— (a) the fact that an enforcement notice has been served on him; (b) the fact that he does not appeal against it; (c) the fact that on an appeal against it the notice is confirmed (whether with or without modifications). (25B) Sections 161B and 161C below (including any power to make regulations) shall apply in relation to enforcement notices as they apply in relation to works notices under section 161A below. (25C) (1) If a person on whom the Agency serves an enforcement notice fails to comply with any of its requirements, he shall be guilty of an offence. (2) A person who commits an offence under subsection (1) above shall be liable— (a) on summary conviction, to a fine not exceeding £20,000; (b) on conviction on indictment, to a fine. (3) If a person on whom an enforcement notice has been served fails to comply with any of its requirements, the Agency may do what that person was required to do and may recover from him any costs or expenses reasonably incurred by the Agency in doing it. (4) If the Agency is of the opinion that proceedings for an offence under subsection (1) above would afford an ineffectual remedy against a person who has failed to comply with the requirements of an enforcement notice, the Agency may take proceedings in the High Court for the purpose of securing compliance with the notice.

Miscellaneous

Bulk supplies

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• (1) After section 20B of the WRA (inserted by section 29 of this Act) there is inserted—

(20C) (1) In the circumstances mentioned in subsection (2) below, the Agency may, in carrying out its functions under section 6(2) of the 1995 Act, propose to a qualifying person (within the meaning of section 40 of the Water Industry Act 1991) that he make an application under that section for a bulk supply of water from a water undertaker. (2) The circumstances referred to in subsection (1) above are that it appears to the Agency that such a bulk supply is necessary in order to secure the proper use of water resources. (3) The Agency shall not make such a proposal without first consulting the Water Services Regulation Authority. (4) The Agency may include in its proposal the period for which, and terms and conditions on which, the Agency considers it appropriate that the bulk supply should be given.

• (2) In section 38 of the WRA (general consideration of applications), in subsection (3), after paragraph (b) there is inserted— “ and may have regard to any failure on the part of the applicant to make an application under section 40 of the Water Industry Act 1991 pursuant to a proposal made by the Agency under section 20C above. ”.

Visiting forces

32

Section 223 of the WRA (exemption of visiting forces from restrictions on abstraction etc) shall cease to have effect.

Application of certain water resources provisions to this Act

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• (1) The relevant WRA provisions apply to (or in relation to) the following sections of this Act (the “applicable sections”) as they apply to (or in relation to) Part 2 or, as the case may be, Chapter 2 of Part 2 of the WRA—

• (a) section 3 (existing impounding works),

• (b) section 4 (existing impounding works: works notices), and

• (c) section 10 (orders under section 33 of the WRA, etc).

• (2) Accordingly, in the relevant WRA provisions—

• (a) references to Part 2 of, or to Chapter 2 of Part 2 of, the WRA are to be read as if the applicable sections were included in that Part or that Chapter,

• (b) references to the related water resources provisions are to be read as if those provisions meant, in relation to the applicable sections, the relevant WRA provisions other than section 222 of the WRA, and

• (c) references to the Secretary of State are to be read as references to the appropriate authority (as defined, in each case, in the applicable section in question).

• (3) The “relevant WRA provisions” are the following provisions of the WRA—

• (a) section 120 (contributions between the appropriate agency and certain other authorities),

• (b) section 158 (works agreements for water resources purposes),

• (c) section 201 (power to require information in respect of water resources functions), as substituted by section 70 of this Act,

• (d) section 216 (enforcement: powers and duties),

• (e) section 222 (Crown application), as in force immediately before the substitution made by paragraph 2(4) of Schedule 21 to the Environment Act 1995 (c. 25) and for so long as the substituted section 222 does not apply to Part 2 of the WRA.

• (4) Section 220 of the WRA (provisions relating to service of documents) applies to documents required or authorised by virtue of any of the applicable sections to be served on any person as it applies to documents required or authorised to be served by virtue of the WRA.

• (5) References in the WRA to the functions (generally) of the Environment Agency or of the Natural Resources Body for Wales, whether framed by reference to the appropriate agency or otherwise, are to be read as including the Agency’s or, as the case may be, the Natural Resources Body for Wales', functions under the applicable sections.

Part 2 — New regulatory arrangements, etc

Establishment, etc of new bodies

Water Services Regulation Authority

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• (1) After section 1 of the Water Industry Act 1991 (c. 56) (in this Act referred to as the “WIA”) there is inserted—

(1A) (1) There shall be a body corporate to be known as the Water Services Regulation Authority (in this Act referred to as “the Authority”) for the purpose of carrying out the functions conferred on or transferred to it by this Act or under or by virtue of any other enactment. (2) The functions of the Authority are performed on behalf of the Crown. (3) Schedule 1A to this Act shall have effect with respect to the Authority. (4) In Welsh the Authority may be known as “Awdurdod Rheoleiddio Gwasanaethau Dŵr”.

• (2) Schedule 1 (which inserts the new Schedule 1A into the WIA) is to have effect.

• (3) The office of Director General of Water Services is abolished.

• (4) Section 1 of, and Schedule 1 to, the WIA (which make provision in relation to the Director General of Water Services) shall cease to have effect.

Consumer Council for Water

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• (1) After section 27 of the WIA there is inserted—

(27A) (1) There shall be a body corporate to be known as the Consumer Council for Water (in this Act referred to as “the Council”) for the purpose of carrying out the functions of the Council under this Act. (2) In Welsh the Council may be known as “Cyngor Defnyddwyr Dŵr”. (3) The Council shall not be regarded as a servant or agent of the Crown or as enjoying any status, immunity or privilege of the Crown. (4) The Council shall establish such committees of the Council— (a) as the Assembly may direct, for relevant undertakers whose areas are wholly or mainly in Wales; and (b) as the Secretary of State may direct, for other relevant undertakers. (5) A direction under subsection (4) above may provide for the allocation of each relevant undertaker to a committee specified in the direction. (6) The power to give a direction under subsection (4) above may not be exercised after the end of the period of six months beginning with the commencement of section 35 of the Water Act 2003. (7) After the end of the period mentioned in subsection (6) above the Council may (subject to paragraph 11 of Schedule 3A to this Act)— (a) establish such committees for relevant undertakers as it considers appropriate; or (b) alter the allocation of a relevant undertaker to a committee established under this section. (8) The Council shall ensure that each relevant undertaker is allocated to a committee established under this section. (9) A committee established under this section is referred to in this Act as a “regional committee”. (10) The purposes of a regional committee shall be— (a) the provision of advice and information to the Council on consumer matters affecting the areas of the relevant undertakers allocated to that committee; (b) such other purposes as the Council may determine. (11) The provisions of Schedule 3A to this Act (which makes further provision about the Council and regional committees) shall have effect. (12) The Council shall exercise and perform its powers and duties in the manner which it considers is best calculated to contribute to the achievement of sustainable development. (13) In this Chapter— - “consumers” includes both existing and future consumers; - “the interests of consumers” means the interests of consumers in relation to— 1. the supply of water by means of a water undertaker’s supply system to premises either by water undertakers or by licensed water suppliers acting in their capacity as such; and 2. the provision of sewerage services by sewerage undertakers; and - “consumer matter” means any matter connected with the interests of consumers. (27B) (1) This section imposes duties on— (a) the Authority and the Council; (b) the Council and the Secretary of State; and (c) the Council and the Assembly. (2) It shall be the duty of the bodies mentioned in each paragraph of subsection (1) above to make arrangements with a view to securing— (a) co-operation and the exchange of information between them; and (b) the consistent treatment of matters which affect both of them. (3) As soon as practicable after agreement is reached on any arrangements required by this section, the parties shall prepare a memorandum setting them out. (4) Arrangements under this section shall be kept under review by the parties. (5) As soon as practicable after agreement is reached on any changes to arrangements under this section, the parties shall revise their memorandum. (6) Parties to arrangements required by this section shall send a copy of their memorandum, and any revised memorandum, to each other person mentioned in subsection (1) above who is not a party to the arrangements set out in the memorandum (or revised memorandum). (7) The Secretary of State shall lay a copy of every memorandum or revised memorandum under this section before each House of Parliament.

• (2) Schedule 2 (which inserts the new Schedule 3A into the WIA) is to have effect.

• (3) The customer service committees established under section 28(1) of the WIA are abolished.

• (4) Section 28 of, and Schedule 4 to, the WIA shall cease to have effect.

Transfer to Authority and Council of functions, property etc

36

• (1) The functions of the Director General of Water Services are transferred to the Water Services Regulation Authority.

• (2) Subject to any express amendment made by this Act, each reference to the Director General of Water Services (or to him as the Director) in the WIA (however the reference is expressed) is to have effect as a reference to the Water Services Regulation Authority (or, as the case may be, the Authority), and accordingly in the WIA “he”, “him” and cognate expressions, in relation to the Director General of Water Services, are to have effect as “it” (or the appropriate equivalent) in relation to the Water Services Regulation Authority.

• (3) The Secretary of State may make one or more schemes (“transfer schemes”) for the transfer of the property, rights and liabilities of the Director General of Water Services to the Water Services Regulation Authority (referred to below in this Part as “the Authority”) or to the Consumer Council for Water (referred to below in this Part as “the Council”).

• (4) A transfer scheme may provide for the transfer to the Council of rights and liabilities relating to persons employed in the civil service of the state.

• (5) On the day appointed by a transfer scheme, the property, rights and liabilities which are the subject of the scheme shall, by virtue of this subsection, be transferred in accordance with the provisions of the scheme.

• (6) Schedule 3 is to have effect in relation to transfer schemes and transfers under this section.

Conditions relating to costs of water regulation

37

• (1) In this section “payment conditions” means conditions included in an appointment under Chapter 1 of Part 2 of the WIA by virtue of section 11(1)(c) of that Act.

• (2) The payment conditions of such an appointment may (without prejudice to the generality of section 11(1)(c)) require the payment by the company holding the appointment of sums relating to any of the expenses mentioned in subsection (3).

• (3) Those expenses are—

• (a) the expenses of the Council, and

• (b) the expenses of the Authority, the Secretary of State or the Assembly in relation to the establishment of the Council.

• (4) The Authority may, in accordance with this section, modify any payment conditions where it considers it necessary or expedient to do so in consequence of, or of preparations for—

• (a) the establishment of the Council, or

• (b) the abolition of the customer service committees established under section 28(1) of the WIA.

• (5) Where the Authority modifies under subsection (4) any payment conditions of an appointment it may make such incidental or consequential modifications as it considers necessary or expedient of the other conditions included in the appointment.

• (6) Before modifying under subsection (4) or (5) the conditions included in such an appointment, the Authority shall consult the company holding the appointment.

• (7) The powers of the Authority under subsections (4) and (5) may not be exercised after the end of the period of two years beginning with the commencement of this section.

• (8) The Secretary of State may, after consulting the Assembly, give directions to the Authority for the purpose of securing that sums relating to any of the expenses mentioned in subsection (3) are included in the sums payable by virtue of payment conditions; and the Authority shall comply with any such direction.

• (9) If this section comes into force before the coming fully into force of section 36(1), references in this section to the Authority are to be read as including references to the Director General of Water Services.

Forward work programmes and annual reports

38

• (1) Before section 193 of the WIA there is inserted—

(192A) (1) The Authority and the Council shall, before each financial year, each publish a document (the “forward work programme”) containing a general description of the projects, other than those comprising routine activities in the exercise of its functions, which it plans to undertake during the year. (2) That description must include the objectives of each project. (3) The forward work programme for any year shall also include an estimate of the overall expenditure which the Authority or the Council expects to incur during the year in the exercise of its functions. (4) Before publishing the forward work programme for any year, the Authority or the Council shall give notice— (a) containing a draft of the forward work programme; and (b) specifying the time within which representations or objections to the proposals contained in it may be made, and shall consider any representations or objections which are duly made and not withdrawn. (5) The notice under subsection (4) above must be published by the Authority or the Council in such manner as it considers appropriate for the purpose of bringing the matters contained in it to the attention of persons likely to be affected by them. (6) The Authority must send a copy of any notice given by it under subsection (4) above to the Council, the Secretary of State and the Assembly. (7) The Council must send a copy of any notice given by it under subsection (4) above to the Authority, the Secretary of State and the Assembly. (192B) (1) The Authority shall, as soon as practicable after the end of each financial year, make to the Secretary of State a report (the “annual report” for that year) on— (a) its activities during that year; and (b) the activities of the Competition Commission during that year in respect of any references made by it. (2) The annual report for each year shall include— (a) a general survey of developments in respect of matters falling within the scope of the Authority’s functions; (b) a report on the progress of the projects described in the forward work programme for that year; (c) a summary of final and provisional orders made and penalties imposed by the Authority during the year; (d) a report on such matters relating to any relevant undertaker whose area is wholly or mainly in Wales as the Assembly may from time to time require; and (e) a report on such other matters as the Secretary of State may from time to time require. (3) The annual report for each year shall set out any general directions given by the Secretary of State under section 27(3) above. (4) The Secretary of State or (as the case may be) the Assembly shall consult the Authority before exercising the power under subsection (2)(d) or (e) above in relation to any matter. (5) The Secretary of State shall— (a) lay a copy of each annual report before each House of Parliament; and (b) arrange for the report to be published in such manner as he considers appropriate. (6) The Authority may also prepare other reports with respect to any matter falling within the scope of its functions and may arrange for any such report to be published in such manner as it considers appropriate. (7) The Authority shall send a copy of each annual or other report under this section to the Assembly, the Council and the Chief Inspector of Drinking Water. (8) In making or preparing any report under this section the Authority shall have regard to the need for excluding, so far as that is practicable, any matter which relates to the affairs of a particular individual or body of persons (corporate or unincorporate), where publication of that matter would or might, in the opinion of the Authority, seriously and prejudicially affect the interests of that individual or body.

• (2) Sections 193 and 194 of the WIA (which make provision about annual and other reports by the Director General of Water Services and customer service committees) shall cease to have effect.

Objectives of regulation of water industry

Objectives and duties under WIA

39

• (1) Section 2 of the WIA (general duties with respect to water industry) is amended as follows.

• (2) In paragraph (a) of subsection (1), after “relevant undertakers” there is inserted “ and of licensed water suppliers ”.

• (3) For subsection (2) there is substituted—

(2A) The Secretary of State or, as the case may be, the Authority shall exercise and perform the powers and duties mentioned in subsection (1) above in the manner which he or it considers is best calculated— (a) to further the consumer objective; (b) to secure that the functions of a water undertaker and of a sewerage undertaker are properly carried out as respects every area of England and Wales; (c) to secure that companies holding appointments under Chapter 1 of Part 2 of this Act as relevant undertakers are able (in particular, by securing reasonable returns on their capital) to finance the proper carrying out of those functions; and (d) to secure that the activities authorised by the licence of a licensed water supplier and any statutory functions imposed on it in consequence of the licence are properly carried out. (2B) The consumer objective mentioned in subsection (2A)(a) above is to protect the interests of consumers, wherever appropriate by promoting effective competition between persons engaged in, or in commercial activities connected with, the provision of water and sewerage services. (2C) For the purposes of subsection (2A)(a) above the Secretary of State or, as the case may be, the Authority shall have regard to the interests of— (a) individuals who are disabled or chronically sick; (b) individuals of pensionable age; (c) individuals with low incomes; (d) individuals residing in rural areas; and (e) customers, of companies holding an appointment under Chapter 1 of Part 2 of this Act, whose premises are not eligible to be supplied by a licensed water supplier, but that is not to be taken as implying that regard may not be had to the interests of other descriptions of consumer. (2D) For the purposes of subsection (2C) above, premises are not eligible to be supplied by a licensed water supplier if— (a) they are household premises (as defined in section 17C below); or (b) the total quantity of water estimated to be supplied to the premises annually for the purposes of subsection (2) of section 17D below is less than the quantity specified in that subsection. (2E) The Secretary of State and the Authority may, in exercising any of the powers and performing any of the duties mentioned in subsection (1) above, have regard to— (a) any interests of consumers in relation to electricity conveyed by distribution systems (within the meaning of the Electricity Act 1989); (b) any interests of consumers in relation to gas conveyed through pipes (within the meaning of the Gas Act 1986); (c) any interests of consumers in relation to communications services and electronic communications apparatus (within the meaning of the Communications Act 2003), which are affected by the exercise of that power or the performance of that duty.

• (4) For subsections (3) and (4) there is substituted—

(3) Subject to subsection (2A) above, the Secretary of State or, as the case may be, the Authority shall exercise and perform the powers and duties mentioned in subsection (1) above in the manner which he or it considers is best calculated— (a) to promote economy and efficiency on the part of companies holding an appointment under Chapter 1 of Part 2 of this Act in the carrying out of the functions of a relevant undertaker; (b) to secure that no undue preference is shown, and that there is no undue discrimination in the fixing by such companies of water and drainage charges; (c) to secure that consumers are protected as respects benefits that could be secured for them by the application in a particular manner of any of the proceeds of any disposal (whenever made) of any of such a company’s protected land or of an interest or right in or over any of that land; (d) to ensure that consumers are also protected as respects any activities of such a company which are not attributable to the exercise of functions of a relevant undertaker, or as respects any activities of any person appearing to the Secretary of State or (as the case may be) the Authority to be connected with the company, and in particular by ensuring— (i) that any transactions are carried out at arm’s length; (ii) that the company, in relation to the exercise of its functions as a relevant undertaker, maintains and presents accounts in a suitable form and manner; (iii) that, if the person is a licensed water supplier, its licence does not authorise it to carry on any activities in the area of the company; (e) to contribute to the achievement of sustainable development. (4) In exercising any of the powers or performing any of the duties mentioned in subsection (1) above in accordance with the preceding provisions of this section, the Secretary of State and the Authority shall have regard to the principles of best regulatory practice (including the principles under which regulatory activities should be transparent, accountable, proportionate, consistent and targeted only at cases in which action is needed).

• (5) After subsection (5) there is inserted—

(5A) In this section— “consumers” includes both existing and future consumers; and “the interests of consumers” means the interests of consumers in relation to— (a) the supply of water by means of a water undertaker’s supply system to premises either by water undertakers or by licensed water suppliers acting in their capacity as such; and (b) the provision of sewerage services by sewerage undertakers.

• (6) In subsection (6), for paragraphs (a) and (b) there is substituted—

(a) subject to subsection (6A) below, the reference in subsection (1) above to the provisions of this Act relating to the regulation of relevant undertakers and of licensed water suppliers is a reference to the provisions contained in Part 2 of this Act (except section 27A, and Schedule 3A), or in any of sections 37A to 38, 39, 39B, 39C, 66B, 66D, 66F to 66H, 66K, 66L, 95, 96, 153, 181, 182, 192A, 192B, 195, 195A and 201 to 203 below; (b) the reference in that subsection to the provisions relating to the financial conditions of requisitions is a reference to the provisions contained in sections 42, 43, 43A, 48, 51C, 99, 100 and 100A below; and

.

• (7) In subsection (6A), for “Subsections (2) to (4) above” there is substituted “ Subsections (2A) to (4) above and section 2A below ”.

• (8) In subsection (6B), for “subsections (2) to (4) above” there is substituted “ subsections (2A) to (4) above and section 2A below ”.

• (9) After subsection (6B) there is added—

(7) The duties imposed by subsections (2A) to (4) above and section 2A below do not affect the obligation of the Authority or, as the case may be, the Secretary of State to perform or comply with any other duty or requirement (whether arising under this Act or another enactment, by virtue of any EU obligation or otherwise).

Guidance to Authority on social and environmental matters

40

After section 2 of the WIA there is inserted—

(2A) (1) Guidance may be issued from time to time— (a) by the Assembly, with respect to appointment areas which are wholly or mainly in Wales; and (b) by the Secretary of State, with respect to other appointment areas, about the making by the Authority of a contribution towards the attainment of any social or environmental policies set out or referred to in the guidance. (2) In formulating guidance, the Secretary of State and the Assembly shall, where practicable, have regard to the costs and benefits which may be expected to result from the guidance. (3) The Authority shall, in exercising and performing the powers and duties mentioned in section 2(1) above (subject to section 2(6) above), have regard to any guidance issued under this section. (4) Before issuing guidance under this section the Secretary of State and the Assembly shall consult— (a) the Authority; (b) the Council; (c) in the case of the Secretary of State, the Assembly and vice versa; (d) relevant undertakers; (e) licensed water suppliers; and (f) such other persons as the Secretary of State or the Assembly considers it appropriate to consult in relation to the guidance. (5) A draft of any guidance proposed to be issued by the Secretary of State under this section shall be laid before each House of Parliament. (6) Guidance shall not be issued by the Secretary of State under this section until after the period of forty days beginning with— (a) the day on which the draft is laid before each House of Parliament; or (b) if the draft is laid before the House of Lords on one day and the House of Commons on another, the later of those two days. (7) If, before the end of that period, either House resolves that the guidance should not be issued, the Secretary of State must not issue it. (8) In reckoning any period of forty days for the purposes of subsection (6) or (7) above, no account shall be taken of any time during which— (a) Parliament is dissolved or prorogued; or (b) both Houses are adjourned for more than four days. (9) The Secretary of State and the Assembly shall arrange for any guidance issued by him or it under this section to be published in such manner as he or it considers appropriate. (10) In this section, an “appointment area” is an area for which an appointment is held under Chapter 1 of Part 2 of this Act.

Standards of performance in relation to water supply

41

• (1) Section 39 of the WIA (procedure for making regulations relating to performance standards in connection with water supply) is amended as follows.

• (2) Before subsection (1) there is inserted—

(A1) The Secretary of State may make regulations under section 38 above— (a) on an application by the Authority, in accordance with subsections (1) to (3) below; or (b) otherwise than on such an application, in accordance with subsections (4) to (8) below.

• (3) In subsection (1)—

• (a) for the words preceding paragraph (a), and paragraph (a), there is substituted “ Where the Authority has made to the Secretary of State a written application complying with subsection (2) below, the Secretary of State may make regulations under section 38 above if— ”,

• (b) in paragraph (b), the “and” at the end of sub-paragraph (i) is omitted, and after sub-paragraph (ii) there is inserted—

(iii) on the Council; and (iv) on such other persons or bodies as the Secretary of State may consider appropriate;

,

• (c) in paragraph (c)(ii), for “(b)(ii)” there is substituted “ (b) ”.

• (4) In subsection (2)—

• (a) in paragraph (a), for “draft provisions proposed by the Director for inclusion in” there is substituted “ the Authority’s proposals for the making of ”,

• (b) in paragraph (b), for “those provisions” there is substituted “ the regulations ”.

• (5) In subsection (3)—

• (a) for “under section 38 above” there is substituted “ on an application by the Authority under this section ”,

• (b) in paragraph (a), for “the provisions proposed by the Director in his application or those provisions” there is substituted “ those which in the opinion of the Secretary of State give effect to the proposals set out in the Authority’s application or to those proposals ”,

• (c) in paragraph (b), the “and” at the end of sub-paragraph (i) is omitted, and after sub-paragraph (ii) there is inserted

and (iii) to any person or body on whom a copy of the Authority’s application was served under subsection (1)(b) above.

• (6) After subsection (3) there is added—

(4) Where no such application as is mentioned in subsection (1) above has been made, the Secretary of State may make regulations under section 38 above only if he considers— (a) that the regulations will contribute towards the attainment of policies relating to public health or the environment; or (b) (if he does not consider that they will so contribute) that there are exceptional reasons why it is otherwise in the public interest that the regulations should be made. (5) Before making regulations under section 38 above by virtue of subsection (4) above, the Secretary of State shall— (a) give notice of his proposals; (b) consider the results of the research carried out in accordance with subsection (7) below; and (c) consider every representation or objection with respect to the proposals which has been duly made and not withdrawn. (6) A notice under subsection (5)(a) above must— (a) summarise the Secretary of State’s reasons for his proposals; (b) specify the water undertaker or undertakers in relation to which it is proposed the regulations should apply; and (c) specify the period within which objections or representations with respect to the proposals may be made. (7) Before giving notice under subsection (5)(a) above the Secretary of State shall arrange for such research as he considers appropriate with a view to discovering the views of a representative sample of persons likely to be affected. (8) A notice under subsection (5)(a) above shall be given by serving a copy on— (a) the Authority; (b) the Council; (c) every water undertaker to which the regulations will apply; (d) persons or bodies appearing to the Secretary of State to be representative of persons likely to be affected by the regulations; and (e) such other persons or bodies as the Secretary of State may consider appropriate.

Standards of performance in relation to sewerage services

42

• (1) Section 96 of the WIA (procedure for making regulations relating to performance standards in connection with sewerage services) is amended as follows.

• (2) Before subsection (1) there is inserted—

(A1) The Secretary of State may make regulations under section 95 above— (a) on an application by the Authority, in accordance with subsections (1) to (3) below; or (b) otherwise than on such an application, in accordance with subsections (4) to (8) below.

• (3) In subsection (1)—

• (a) for the words preceding paragraph (a), and paragraph (a), there is substituted “ Where the Authority has made to the Secretary of State a written application complying with subsection (2) below, the Secretary of State may make regulations under section 95 above if— ”,

• (b) in paragraph (b), the “and” at the end of sub-paragraph (i) is omitted, and after sub-paragraph (ii) there is inserted—

(iii) on the Council; and (iv) on such other persons or bodies as the Secretary of State may consider appropriate;

,

• (c) in paragraph (c)(ii), for “(b)(ii)” there is substituted “ (b) ”.

• (4) In subsection (2)—

• (a) in paragraph (a), for “draft provisions proposed by the Director for inclusion in” there is substituted “ the Authority’s proposals for the making of ”,

• (b) in paragraph (b), for “those provisions” there is substituted “ the regulations ”.

• (5) In subsection (3)—

• (a) for “under section 95 above” there is substituted “ on an application by the Authority under this section ”,

• (b) in paragraph (a), for “the provisions proposed by the Director in his application or those provisions” there is substituted “ those which in the opinion of the Secretary of State give effect to the proposals set out in the Authority’s application or to those proposals ”,

• (c) in paragraph (b), the “and” at the end of sub-paragraph (i) is omitted, and after sub-paragraph (ii) there is inserted

and (iii) to any person or body on whom a copy of the Authority’s application was served under subsection (1)(b) above.

• (6) After subsection (3) there is added—

(4) Where no such application as is mentioned in subsection (1) above has been made, the Secretary of State may make regulations under section 95 above only if he considers— (a) that the regulations will contribute towards the attainment of policies relating to public health or the environment; or (b) (if he does not consider that they will so contribute) that there are exceptional reasons why it is otherwise in the public interest that the regulations should be made. (5) Before making regulations under section 95 above by virtue of subsection (4) above, the Secretary of State shall— (a) give notice of his proposals; (b) consider the results of the research carried out in accordance with subsection (7) below; and (c) consider every representation or objection with respect to the proposals which has been duly made and not withdrawn. (6) A notice under subsection (5)(a) above must— (a) summarise the Secretary of State’s reasons for his proposals; (b) specify the sewerage undertaker or undertakers in relation to which it is proposed the regulations should apply; and (c) specify the period within which objections or representations with respect to the proposals may be made. (7) Before giving notice under subsection (5)(a) above the Secretary of State shall arrange for such research as he considers appropriate with a view to discovering the views of a representative sample of persons likely to be affected. (8) A notice under subsection (5)(a) above shall be given by serving a copy on— (a) the Authority; (b) the Council; (c) every sewerage undertaker to which the regulations will apply; (d) persons or bodies appearing to the Secretary of State to be representative of persons likely to be affected by the regulations; and (e) such other persons or bodies as the Secretary of State may consider appropriate.

Functions of the Council

General functions of the Council

43

• (1) After section 27B of the WIA (which is inserted by section 35) there is inserted—