House of Lords - Explanatory Note
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Clauses 86 to 91: Sewers and drains

361.     Clause 86: Requisition and adoption of sewers. This clause amends section 99 WIA91 to allow the offset payment to be made as a single sum as an alternative to paying over 12 years and provides a new section 100A which sets out how the single sum should be calculated.

362.     Clause 87: Provision of public sewers otherwise than by requisition. This clause removes the cut off date from Section 101A of the WIA and extends the duty to provide a public sewer in certain circumstances to all properties where the existing non-mains drainage arrangements is causing environmental or amenity problems.

363.     Clauses 88 to 91 provide for lateral drains to be requisitioned from the sewerage undertaker or if they are to be constructed by someone else for adoption by the undertaker, an agreement should be entered into with the undertaker to ensure they are built to adoptable standards. It also provides for an inspection chamber to be constructed close to the curtilage of the property to define the demarcation between the lateral and the house drain. The chamber will also have to be constructed to the required standard for adoption by the sewerage undertaker. A lateral is that part of a drain which runs from the curtilage of the premises to the sewer.

364.     Clause 88: Requisition of lateral drains. This clause amends section 98 of the WIA (duty to comply with sewer requisition) to enable lateral drains to also be requisitioned from the sewerage undertaker.

365.     Clause 89: Adoption of lateral drains. This clause amends s104 of the WIA to enable lateral drains to be adopted by the sewerage undertaker if they have been constructed in accordance with an agreement with the undertaker. It also makes provision for an inspection chamber to be installed in the lateral drain at or near the point of connection between the lateral drain and the house drain at the curtilage of the property.

366.     Clause 90: Requisitioning and adoption of lateral drains: supplementary. This clause amends other relevant sections of the WIA and includes a definition of lateral drains.

367.     Clause 91: Communication with public sewers. This clause makes consequential amendments to section 106 of the WIA (right to communicate with public sewers) and in particular to subsection 4 to enable a request to communicate a lateral drain with the sewer to be refused if the standard of construction of the lateral is unreasonable.

PART 4 - SUPPLEMENTARY

Clauses 92-97

368.     These clauses deal with devolution, consequential amendments, transitional provisions and powers to make orders and regulations, including providing for Schedule 7 and 8 to have effect. They also cite the name of this Act as the Water Act 2003 and cover its extent.

369.     Clause 95: Powers to make further supplementary, consequential and transitional provisions, etc This provision enables the Secretary of State to make such supplementary, incidental, consequential, transitory, transitional or saving provision as she considers necessary or expedient for the purposes of, in consequence of, or for giving full effect to any provision of this Act. This includes a power to amend primary legislation.

370.     This power is considered by the Government to be necessary since the Bill is complex. A wide range of consequential amendments to existing legislation and other supplementary, incidental and transitional provisions may be needed.

371.     Clause 96: Regulations and orders. This clause relates to the general purposes for which powers under the Bill may be exercised. This provides that any power to make any order or regulations includes powers to make "such incidental, supplementary, consequential, saving or transitional provision (including provision amending, repealing or revoking enactments..)" as the authority doing so considers "expedient". Instruments are generally subject to the negative procedure (clause 96(3)).

Schedule 7 Minor and Consequential Amendments

372.     Part 1 of this Schedule makes a number of minor changes to the abstraction and impounding licensing regime. These include provision in paragraph 2 for the EA to require reports, such as an environmental report, to accompany a licence application. Provision is also made by paragraph 10 to end the current exemption from charges for groundwater abstractions for agricultural use (other than spray irrigation) of less than 20m3 per day (generally such abstractions will become exempt from licence control and hence also from charges).

Schedule 8 Minor and Consequential Amendments: Licensing of Water Suppliers etc.

373.     Schedule 8 sets out minor and consequential amendments regarding licensing of water suppliers etc.

374.     In Section 6 of the WIA new subsection (5A) prevents a licensed water supplier from also holding an appointment as a water undertaker. This has the effect of not allowing undertakers to act as licensed water suppliers at the same time. In practice undertakers will need to set up new water supply companies in order to operate outside their own area as licensed water suppliers.

375.     Section 18 of the WIA is amended to include licensed water suppliers in orders for securing compliance. Amendment to subsection (1) means that breach of conditions of licence and other enforceable requirements will leave the licensee subject to enforcement action. The insertion of new subsection (1A) will provide for action where either an undertaker has caused or contributed to a contravention by a licensee or vice versa. This allows enforcement action to be taken against undertakers causing licensed water suppliers to breach their licence conditions or statutory duties which are made subject to enforcement, or against licensed suppliers where they cause an undertaker to breach its appointment conditions or statutory duties subject to enforcement. This allows for cases where, for instance, an undertaker is in breach of its statutory duties with regard to water quality, but a licensed water supplier contributed to the problem by the omission of not alerting the undertaker to an incident at its customer's premises.

376.     Further minor amendments in this section achieve the same purpose as above; including licensed suppliers in the framework for provisional enforcement orders (subsection (4)), confirmation of these (subsection (5)) and explaining how enforcement orders operate (subsections (6) to (8)).

377.     Section 19 of the WIA: Exceptions to the duty to enforce; minor and consequential amendments to make provision for licensed water suppliers. This not only allows for the same exceptions for licensed water suppliers as undertakers where the contravention is trivial or the company is already complying etc. but will also make an exception where the extent of the contribution to the contravention was trivial.

378.     Section 20 of the WIA: Procedure for making final enforcement orders; minor and consequential amendments to make provision for licensed water suppliers and contributing to contravention. These ensure the new elements of enforcement are included in the Secretary of State's or Authority's notices.

     379.     Section 22 of the WIA: Minor and consequential amendments to make provision for licensed water suppliers.

380.     Section 23 of the WIA: is amended and has insertions of subsections (2A) and (6). At present, there are various circumstances under which an undertaker may be placed in special administration. These include: becoming insolvent and being in contravention of a requirement so that it would be inappropriate for it to continue to hold an appointment. This amendment extends the existing special administration provisions to licensed water suppliers. The aim of a special administration order is to enable the activities of a licensed water supplier (holding a combined licence) to carry on in respect of its strategic supplies (as defined in section 66G). When a licensed water supplier is put into special administration, the special administration order would make the continued input of water into the supply system one of its purposes. The order allows the input of water to carry on whilst arranging for transfer of those activities to another company or companies through the appointment of a special administrator. (The order can only be made however, if the company already had its supply designated as a strategic supply under new Section 66G of the Water Industry Act).

381.     Section 24 is amended (and with insertion of subsection (1A)) to explain the grounds on which special administration procedures can be invoked in relation to qualifying licensed water suppliers. These grounds will include a breach of licence conditions or an enforcement order or causing an undertaker to breach its duties (if this was serious enough to make it inappropriate for the licence holder to continue to hold its licence). The grounds to invoke special administration will also include serious financial difficulty or the company being about to be wound up.

382.     Sections 25 and 26 of the WIA: Minor and consequential amendments.

383.     Section 43: Customers who requisition a new main in order to make a connection to their premises have to pay an amount known as the relevant deficit. This is defined in this section as the annual borrowing costs of the loan of the amount required to lay that main, minus the water charges payable in respect of that main. The latter amount is the charges paid by the undertaker's customer(s) supplied by that main. If one or more of the customers supplied by that main are subsequently supplied by a licensed water supplier, this amount will reduce and the relevant deficit will then not reflect the revenue received by the undertaker in respect of that main. To correct this, the amendment modifies the calculation of the water charges payable so that it includes the amount received by the undertaker from the licensed water supplier for giving wholesale supplies and permitting the introduction of water into its supply system which can be attributed to the licensed water supplier's customers supplied by that main.

384.     Sections 52 and 55 of the WIA are amended to remove the duty for undertakers to supply water to customers eligible for competition outside their areas of appointment whilst ensuring that they do have a duty to supply ineligible customers, out of area, whether for domestic or non-domestic purposes. This has been done so that undertakers are not competing for customers with their associated companies outside their area boundaries. This change also removes any distinction between non-domestic and domestic duties outside undertakers' areas to supply to households and other customers ineligible for competition, i.e. household premises or premises using less than the threshold quantity. There has been ambiguity over application of the non-domestic duty due to requests for supply to premises for both domestic and non-domestic purposes. The changes will remove some ambiguity as to duties when an undertaker supplies water out of area. The only distinction will now be between eligible and ineligible customers.

385.     Insertion of new subsection (6A) to section 52 of the WIA removes undertakers' domestic supply duty to any premises where a customer has served notice that they wish to discontinue being supplied by the undertaker (a request made under new Section 63AA; see below) on transfer to a licensed water supplier. This means that a customer will have to re-apply to the undertaker for a supply for domestic purposes (under section 52) if they wish to return to being supplied by an undertaker. This subsection ensures that, once a customer has transferred from an undertaker to a licensed water supplier, specific rights and obligations which arise between an undertaker and its customers no longer apply. As an example, once a customer has discontinued being supplied by the undertaker, the licensed water supplier is responsible for ensuring a continued supply of water through its agreement with the undertaker. But the undertaker continues to be responsible to the entire network for water pressure and constancy of supply.

386.     New sections 63AA and 63AB of the WIA allow undertakers' (domestic and non-domestic supply) customers to notify them that they no longer want to be supplied by the undertaker and instead are to be supplied by a licensed supplier. The notice will specify the time at which the transfer will occur and must allow at least 2 days notice for metered premises (so that the undertaker can arrange for the meter to be read). Once the undertaker no longer supplies customers, its domestic or non-domestic (as relevant) supply duty to them is interrupted until they re-apply to the undertaker for a supply. Domestic customers wishing to return to the undertaker will re-apply under section 52 of the Act. Non-domestic customers wishing to return will re-apply for a supply under section 55 of the Act. In the latter case, unlike an application under section 52, the undertaker will have ensure that it can meet other current and future supply obligations before it is required to re-supply.

387.     Section 63AC. The insertion of section 63AC caters for instances where the customer ceases to be supplied by the licensed water supplier but has not notified the undertaker that he has made other arrangements or otherwise does not want a supply. Where the customer makes such arrangements himself he would be expected to make these in good time to arrange re-supply by the undertaker. Where the licensee has ceased to supply for some reason, an interim supply needs to be available until proper arrangements for re-supply (by the undertaker or another supplier) can be made by the customer.

388.     Subsections (2) to (4) provide for the undertaker, as long as it does not put at risk its duties under the Act, to continue supplying the customer with the water as the supplier was previously doing. This supply will continue for a period of at least three months whilst the customer is making other arrangements.

389.     Subsections (5) and (6). Where the customer seeks re-supply for non-domestic purposes (under section 55 of the Act) the undertaker will consider this a request for 'new' supply and will first have to ensure its other obligations can be fulfilled before agreeing to supply. The normal provisions regarding disconnections for non-payment and at the request of the customer (under Sections 60 to 63 of the Water Industry Act) will apply.

390.     Section 68 of the WIA is amended to include licensed water suppliers in the water quality provisions of the Act. Several small amendments in Section 68 ensure that the undertaker's duty to provide wholesome water under this section exists whether the water is supplied by the undertaker or by a licensed water supplier. The duty applies to water supplied for domestic or food production purposes through the water undertaker's supply system.

391.     New subsection (1A) requires that the licensed water supplier will be responsible for ensuring the water it supplies is wholesome at the time of supply. This will be irrespective of the source from which the water originates; the potential sources being its own abstraction and treatment works, where relevant, or treated water from an undertaker supplied under a wholesale agreement. All licensed water suppliers will have a responsibility to ensure that the water that they supply is wholesome. For example, a licensed water supplier with a retail authorisation may be in receipt of information (from their customers) that, if it was passed on to the relevant undertaker, could alert the undertaker to a water quality problem. In this instance the licensed water supplier acts as a conduit, passing important information between their customer and the undertaker, irrespective of which party supplied the water.

392.     Subsection (2) is amended so that, as for the undertaker, the licensed supplier will not be responsible for instances where the water has ceased to be wholesome after having left the undertaker's pipes. However the undertaker (subsection (3)) does have a responsibility to ensure steps are taken to reduce the risk of water deteriorating after leaving the undertaker's pipes. An example of this is where the water supplied may react with lead piping at a premises, leading to an increase in the lead content of water at the tap, the undertaker will be expected to consider additional treatment of the water at the treatment works to reduce these risks. Subsection (3A) extends this duty to licensees.

393.     Section 69 of the WIA is amended to ensure licensed water suppliers are included in the provisions for preserving water quality through the supply system. These provisions describe the general steps an undertaker should ensure are taken, such as monitoring, analysis, recording etc, to ensure that the water it supplies meets the wholesomeness requirements set out in Section 68. The section provides for these steps to be specified by regulation making powers of the Secretary of State under this section. In the case of the undertaker, the 'steps' described in subsection (2) will need to cover all of the supplies made using the undertakers system. In the case of licensed water suppliers the steps taken to ensure water quality in subsection (2) will apply only to supplies made by them using the undertakers system.

394.     The Section is amended to allow inclusion of licensed suppliers in regulations made by the Secretary of State regarding the use of approved substances and processes in treating water intended for domestic supply or food production purposes, and to allow inclusion of licensed suppliers in regulations made by the Secretary of State regarding publication of information to customers and other interested parties about water quality in the supply system.

395.     Section 70 of the WIA is amended to ensure that anyone concerned in the supply of water unfit for human consumption will be liable to prosecution. This will allow licensed water suppliers and their contractors (or those of undertakers) to be prosecuted for any incidents of such supply. The effect of new subsection (1A) is to include undertakers and any other employer of self-employed person of those concerned in the supply as relevant persons to which the section applies. These parties would all have to show, in the case of an incident (subsection (3A)), that they had no reasonable grounds for suspecting that the water would be used for human consumption or that they took all reasonable steps and all due diligence in avoiding the incident. Subsection (3B) explains the concept of relevant arrangements. The undertaker is in control of the system and in granting access to the licensed water supplier will ensure that they put in place arrangements to ensure water is fit. The licensed water supplier would be responsible for ensuring that all these arrangements are carried out. This is to prevent an undertaker or licensed water supplier claiming that an incident was the fault of a contractor or someone else concerned in the supply, where it had not taken sufficient care to ensure the contractor was carrying out his duties properly, i.e. it will have some responsibility whether it was directly or indirectly involved in an incident.

396.     Section 75 of the WIA: Minor and consequential amendment to make provision for premises supplied by licensed water suppliers to remain within the provisions which enable undertakers to prevent damage, contamination or misuse of the water, to their systems arising from customers fittings.

397.     Section 76 of the WIA is amended to include premises supplied by licensed water suppliers within those that will be affected by temporary hosepipe bans. Since undertakers issue public notices about hosepipe bans, they will remain responsible for informing all customers on their networks, irrespective of the supplier.

398.     Section 90 of the WIA is amended to ensure that licensed water suppliers are indemnified against any action taken against them in connection with their being required to fluoridate the water they supply. Since fluoridation is not a requirement in order to ensure wholesome water, but an addition requested by local authorities for health reasons, undertakers are indemnified against any action against them regarding the effects of fluoridation. The same indemnity undertakers enjoy under the Water Industry Act is extended to licensed water suppliers.

399.     Section 93 of the WIA: Minor and consequential amendments.

400.     Amendment of sections 93A to 93D of the WIA extends to licensed water suppliers the existing duty for undertakers to promote efficient use of water by their customers. Efficiency services offered to customers can, for example, advise them of ways of reducing their water consumption and adapting their seasonal water requirements.

401.     Section 150 of the WIA is amended to ensure that the effect of the section, to impose a cap on charges on water resellers, does not affect licensed water suppliers supplying their customers.

402.     Section 152 of the WIA is amended to allow licensed water suppliers to obtain grants in order to comply with national security directions (Section 208) where this is appropriate. Currently undertakers can receive grants in order to assist them with complying with national security directions.

403.     Section 158 of the WIA, powers to lay pipes in streets, is amended to include certain pipes laid in order to introduce water at the request of a licensed water supplier (subject to exclusions). The powers to lay these pipes will also apply across third party land under section (159). This power will not apply to pipes laid for the purpose of connecting to a non-potable network.

404.     Amendment of Section 179 of the WIA requires undertakers to own any pipes laid by themselves between the licensed water supplier's treatment works and the undertakers supply system, or between the secondary undertakers' distribution network and the undertaker's supply system in accordance with Sections 66B and 66C respectively.

405.     Amendment of Section 195 of the WIA requires the Authority to add information on licensed water suppliers to the register that it keeps on undertakers' appointments. The register will include information on licences, variations and revocations. It will also include any direction, consent or determination made by the Secretary of State, Environment Agency or the NAW.

406.     Amendment of Section 201 of the WIA extends the right of the Secretary of State or the Authority to publish information in the public interest on the activities of a licensed supplier.

407.     Amendment of Section 202 of the WIA extends to licensed water suppliers the duty to supply to the Secretary of State information related to their licensed activities that the Secretary of State might reasonably require in order to carry out his statutory functions.

408.     Amendment of Section 203 of the WIA extends the power of the Secretary of State or the Authority in order that they may acquire information from any person if they suspect a licensed water supplier has breached its licence conditions or caused an undertaker to breach its appointment conditions; and also conversely, if they suspect that an undertaker has caused a licensed water supplier to breach the conditions of its licence. This is to ensure that the Secretary of State or Authority is able to gather all relevant information that they might reasonably need relating to the supply of water by a licensed water supplier.

409.     Currently Section 205 of the WIA allows sewerage undertakers to demand meter readings from water undertakers serving the same customer in order to estimate their sewerage service bills. The Section is amended to allow any party; water undertaker, licensed water supplier or sewerage undertaker, subject to paying a suitable fee, to demand meter readings from the other party if it has that information. In practice this will mean if the water undertaker takes a meter reading, the sewerage undertaker and the licensed supplier to the same premises may demand the meter reading on paying the meter reading charge. It may be the case that the licensed water supplier has its own meter and comes to an arrangement with the sewerage undertaker to supply it with a meter reading. This amendment ensures data is available to all parties involved in providing water and sewerage services. The aim is to prevent all three parties being obliged to visit the customer's premises (with the possible disruption to the customer) to take meter readings.

410.     Amendment of Section 206 of the WIA makes consequential amendments in respect of licensed water suppliers; restricting disclosure of any information obtained from licensed water suppliers by provisions of the Act. This extends the protection currently available to undertakers; that certain commercial or personal information is not published except under certain circumstances.

411.     Amendment of Section 208 of the WIA includes licensed water suppliers within the remit of the Secretary of State's power to make directions with regard to issues of national security and emergency planning. This draws in licensed water suppliers so that their water sources can if necessary be taken into account in preparations made to deal with civil emergencies.

412.     Section 213 and 219: Minor and consequential amendments.

413.     Schedule 2 of the WIA is amended in order to apply the provisions relating to the making of transfer schemes to circumstances where a special administration order is made in respect of a licensed water supplier which provides one or more designated strategic supplies. They entitle a special administrator to make a scheme to transfer all or part of the property, rights, and liabilities of the licensed water supplier related to the strategic supply to one or more other parties, namely a new licensed water supplier together with, if the special administrator so determines, one or more of the undertakers in whose areas the strategic supplies are located. The new paragraph 4A, however, prohibits the special administrator from including in the scheme provisions to transfer the licence itself to the new licensed water supplier, which must go through an appropriate licensing process if it does not already hold a licence.

414.     Schedule 3 of the WIA governs the application of certain provisions of the Insolvency Act 1986 in the specific circumstances of special administration. The amendments provide that the Insolvency Act will be applied where a licensed water supplier is the subject of a special administration order in the same way as it applies where an undertaker is the subject of a special administration order.

415.     Minor and consequential amendments will be made to paragraph 19A(9) of Schedule 7 to the Competition Act 1998 to make provision for licensed water suppliers.

416.     Minor and consequential amendments will be made to section 168 and section 249 of the Enterprise Act 2002 to make provision for licensed water suppliers.

 
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Prepared: 24 February 2003