Draft Water Bill

Written evidence submitted by British Hydropower Association

General

1. A subsidiary purpose of the draft Water Bill 2012 (hereafter "the Bill") is to change the way in which the Environment Agency (EA) regulates water licences and consents, intended to reduce administrative burdens (Introduction, 38-40).

2. These regulatory changes are of acute interest to the hydropower industry, as they will affect the majority of regulatory permissions required for all hydropower schemes - from the smallest to the largest. This submission therefore relates to Part 3 Clause 26 and Schedule 6 of the Bill, and commentary upon these.

3. While this is a DEFRA Bill, Part 3 enables regulations which will decisively influence all deployment of this renewable energy technology. Therefore proper scrutiny of this Part requires full involvement of DECC specialists.

4. We strongly support the intention to improve the EA’s efficiency in processing applications. To install a hydropower scheme, our members must typically apply separately for water abstraction and/or impoundment (WAI) licences, flood defence consents, and fishpass approval. Combining these into a single application process would be a welcome innovation. However, simply replacing these with separate applications under a new system would confer no benefit.

5. In allowing the EA to regulate abstraction solely via the Environmental Permitting Regulations (EPR), the Bill allows repeal of existing statutory definitions and protections (Water Resources Act 1963 et seq.). While the Bill acknowledges water rights (Schedule 6, 3 (2)(b)), it significantly changes the status of abstraction - from a protected licensed right to the lawful use of water– to a permitted form of harmful or polluting activity. The Committee should consider the full legal implications of this revision of water (and by extension, property) rights. Commentary (90-92) should clarify this change, and Impact Assessments acknowledge its financial implications. Conversely, if bringing WAI under EPR is not intended to materially change the legal status of the use of water, the legislation should set down limitations or guiding principles for exercising the new regulation-making powers. This will help to maintain regulators’ policy neutrality on future applications to use water.

6. Various provisions of this Bill are transcribed from pollution legislation. It is uncertain that drafting has adequately considered the effects of transferring detailed provisions to this dissimilar sphere of activity.

7. EA hydropower permitting processes have altered significantly in recent years, with centralisation, publication of good practice guidelines (GPGs), and ongoing review of these guidelines via consultation. Protracted revision of the Feed-In Tariffs has also caused market uncertainty to affect our members. Regulatory stability is therefore urgently required in order to make progress in achieving anticipated levels of deployment of distributed renewable electricity production.

8. As a result we urge the Committee to make changes in the Bill that will reduce and not increase uncertainty. There is a high value on making clear the limits of the intended new powers, and on making clear which areas will see no change: otherwise the risk is a new hiatus in these capital-intensive developments, with long lead times.

9. Unfortunately our members have frequently experienced EA officers attempting to exercise existing powers unnecessarily restrictively, exceeding requirements of law or internal EA guidance. This increases regulatory costs to all, artificially restricts the effectiveness of hydropower installations, increases deployment costs and discourages investment in renewables. We therefore recommend that elements of the Bill are tightened to improve rather than exacerbate this problem.

10. We consider the Impact Assessments dubious. These should attract expert scrutiny. For example, the assumptions on fishpass approvals should be queried in detail (market development, real-world costs, regulatory process).

11. Applicants are not only "businesses". Please acknowledge a wide range of participants including homeowners and community groups.

12. Our comments below reflect the general principles above. Numberings below are references to the Bill itself.

Specific

Part 3

26 (3) "burdens" is ambiguous. The text should clarify this means not only public-sector administrative burdens, but also administrative/financial burdens upon applicants (as per Introduction 38, Commentary 34/38). Ministerial regard here for reducing burdens need not be limited solely to combining the regulations.

26 (3) We consider that in making regulations under this section, the Minister should also have regard to: a cost-benefit analysis; affordability – not just for the regulator; proportionality; rights conferred by existing licenses for abstraction, impoundments, etc; scientific evidence; alternatives; the likely efficacy of the contemplated new regulations towards their stated goals; likely impacts on renewable energy generation and investment therein.

26 (4) (b) We ask how the Bill, allowing "different provision [for] persons [or] locality", will guard against: inconsistent/postcode regulation; relaxing proper consideration of site-specific conditions; intervening in markets.

26 (5) New regulations in this area have huge potential to compromise hydropower, which in licensing terms is distinctive from industry in general. Consequently, please insert ",_hydropower" after "agriculture". We request that the British Hydropower Association, representing this interest, is identified to the Minister as a necessary consultee.

26 (6) The Bill should not seek to preclude timely consultation. We are concerned about this point because, for example, new fish passage legislation was consulted upon in 2009 which would have produced grave and unjustified difficulties for our members, and the then Government’s response to consultation was most unsatisfactory. The proposed legislation never came into force. We would therefore not want to see such regulations proposed again without a thorough new consultation.

Schedule 6

3 We feel that this is very broad and gives too much scope for the introduction of unwarranted and damaging regulations in what is a very sensitive area for our members. In particular, "the setting of overall limits" if not qualified could easily fail to recognise that abstractions for hydropower differ distinctively from other purposes. Other abstractions are "consumptive", permanently removing water, making it unavailable for other users or ecological benefit. While hydropower abstracts often large quantities, it does so only locally, between points of abstraction and discharge - a distance which may be as short as 5-10m. Water is then returned, and remains available for other purposes. If the Bill supersedes laws maintaining this distinction, it must ensure that any limits intended to address a justified concern about permanent abstraction do not severely restrict hydropower deployment.

3 (1)(b) "or could affect" is disproportionately restrictive.

6 & 7 Any such new regulations have great potential to damage this industry and should therefore be subject to consultation and the kind of testing recommended herein re section 3 above. Clearly hydropower is a specialist area and this part of the Bill is very broad, which heightens the need for deep industry engagement in drawing up the details of such regulations.

8 (2) Please insert "reasonable" before "conditions" to reassure our members and their investors.

9 (1) It is very important to our industry that this is subject to the EA’s Presumption-of-Renewal policy in relation to time-limited abstraction licences.

9 (2) This would cause us great concern. Investment in (and lending to) hydropower developments is firmly based on the premise that licences will reliably remain unchanged for the long term.

9 (3) This is also a cause for serious concern for a similar reason to the above. Any such regulations must include strong safeguards for existing abstractors.

10 (2) To allow revocation by the regulator would do huge damage to our industry, unless such revocation could only occur in circumstances that had been industry-approved through consultation.

11 Currently, charges are set within legislation which also includes statutory turnaround times. The Bill allows both charging ceilings and turnaround times to be abandoned, and subsistence charges to be levied. It is doubtful that this will control costs or reduce burdens on applicants, particularly under EPR (where DEFRA already recognises failings on timeliness and "complex cases").

12 (a) To allow the regulator to charge for advice would significantly counteract the Bill’s aim of reducing burdens on applicants. It would also increase the initial risk in hydropower developments - already a significant difficulty for the industry, since schemes are slow to develop and capital-intensive.

13-16 These purposes are too open-ended to be proportionate, and thus at odds with the Bill’s intent of reducing regulation as per Penfold Review.

14 This is extremely broad, it is hard to imagine what its author intends. It is therefore a concern for industry. We request that it is clarified or removed.

15 (1) Please add "without a relevant permit" after "specified description" in order to clarify the intent and to reassure our members and investors. As drafted, this presents a substantial risk to anyone contemplating investment in hydropower.

15 (2) Such regulations would be totally unacceptable to our members, and would threaten to levy windfall charges and/or remove their source of income. The idea appears akin to the 2009 fishpass legislation proposals which were so unfairly drafted, attracted strong opposition from this Association, and were rightly abandoned.

16 Please add "new" before "structures" to avoid this becoming a mechanism for unfair retrospective charges on landowners.

17 Such powers should only be exercisable where reasonable grounds are given for information compiling/provision, and where the costs of compliance are minimal or borne by the regulator. Otherwise such regulations could present unwarranted significant costs on persons with nothing to gain from the initiative.

19 It is unacceptable that regulators should consult without taking responses into account. Please replace "providing for" with "requiring". (This does not prevent regulators disputing responses.)

20 (3) (a) We feel that "information" here is too vague: only specific types of information and information that is reasonable to request should be included.

20 (3) (b) We strongly object to this on a similar basis to 15 (2).

21 (1) (a) Please replace "potential" with "demonstrably likely and imminent". Unfortunately the experience of our members is that regulatory officers will otherwise require onerous interventions by permit holders for dubious reasons.

21 (1) (b) We have grave concerns here. Many hydropower operators are small organisations who would be unable to provide financial security concurrently with funding remedial works.

21 (1) (c) The Bill transcribes text from pollution regulations - regarding imminent risks of serious environmental pollution, without taking account of the different nature, urgency, or scale of risk. The measures contemplated might be reasonable to apply to a major incident in a large water company or energy utility. Unfortunately, as drafted, this also creates a huge potential liability for hundreds of small hydropower schemes, which is not appropriate (particularly when the envisaged risks do not result from contraventions).

21 (1) (c) (iii) This seems very excessive and inappropriate. Almost all hydropower schemes will be reliant on a weir or natural fall, which will usually form an impediment (usually significant in the eyes of EA fisheries officers) to the movement of fish. Such a regulation could be literally interpreted to require all hydropower operators to remove or make their weirs passable to fish, at their own expense, irrespective of risk. This could put many out of business. The subsection does not even distinguish between freshwater and migratory fish (cf. clause 26, 8). Creating an absolute requirement without due consideration of need or benefit risks perverse outcomes. We strongly feel that this subsection should be aborted.

22 Oblique phraseology which merits re-drafting. Any suspension must be subject to tight controls. Investment in (and lending to) hydropower developments is predicated upon licences being relied upon to remain unchanged for the long term.

25 This should be qualified to give the person reasonable notice and opportunity to take such actions before the regulator.

30 (1), 31 (1), 32 (1) In each case: after "appropriate", please add "after consultation with interested parties"

35 This is very hard to interpret, and hence to comment on. At the least, this merits re-drafting.

37 (a) Please add to the end of this clause "provided that there is always scope for deviation from such guidance where that is appropriate in view of site characteristics or other evidence."

September 2012

Prepared 21st September 2012