Previous Section Back to Table of Contents Lords Hansard Home Page

"( ) Section 174 of the Water Act 1989 (c. 15) (general restrictions on disclosure of information) is amended as follows.
( ) In paragraph (b) of subsection (2), for "or a sewerage undertaker" there is substituted ", sewerage undertaker or company holding a licence under Chapter 1A of Part 2 of the Water Industry Act 1991".
( ) In paragraph (c) of that subsection, for "203(1) or (2)" there is substituted "203(1), (1A), (2) or (2A)".
( ) In subsection (6)(a), after "sewerage undertaker" there is inserted ", or with the carrying on by a company holding a licence under Chapter 1A of Part 2 of the Water Industry Act 1991 of activities under its licence,"."

On Question, amendment agreed to.

Baroness Byford moved Amendment No. 143:

The noble Baroness said: My Lords, in moving Amendment No. 143, I shall speak also to Amendments Nos. 144 and 145. The sub-paragraph in question allows a licensed water supplier to transfer to another company or companies sufficient of its activities to protect a strategic supply. That will be done under a special administration order.

I want to ask the Minister what safeguards there will be to ensure that the company receiving the privilege is worthy of it. Will the water undertaker play any part? The court may hear from the Secretary of State or the authority in regard to the licensed water supplier, but will the court hear submissions from anyone with regard to the replacement? Surely if a licensed water supplier contravenes regulations or goes out of business, the logical approach is to give back the right of supply to the water undertaker until a proper application can be dealt with from a new would-be licensed water supplier. That deals with Amendment No. 143.

Amendment No. 144 concerns the ministerial explanation that encapsulates all my doubts about the reasons for this Bill and the way those reasons are being translated into action. At col. GC 82 of Hansard of 10th April the noble Baroness, Lady Farrington, explained that the Bill extends the duty that water undertakers already have to supply water to domestic customers outside their area. It restricts them to competing only through their associated companies and not directly. We discussed that matter earlier today.

We now have a situation where water undertakers will lose their biggest customers to the licensed water suppliers to improve the competitiveness of the industry. Water undertakers will have an extended duty to supply on demand outside their area to non-domestic customers. However, water undertakers will compete outside their area only through their associated companies.

Am I the only person in this House who believes that some convoluted thinking is involved here? Why cannot undertakers compete as themselves? The amendment as tabled is totally inadequate for changing something as profound as this, but I hope that the Minister will address seriously the comments that I have made in proposing the amendment and that she will provide some answers.

24 Jun 2003 : Column 238

I turn to Amendment No. 145. Our concern with this aspect of the Bill is that the water undertaker must pick up where the licensed supplier left off without necessarily being aware that it has left off. It may be possible to incorporate a legal duty on the supplier to inform the undertaker before abandoning the supply, but in some circumstances that one can think of, that would be the last thing that might happen.

There seems to be a presumption that in all cases the supplier will be drawing a continuous, probably steady, stream of water from the undertaker. Will the Minister confirm that in all cases that will be so? Further, will the total supply come from a single undertaker? What is the possible involvement of, for example, the British Waterways Board? What are the chances of pipe supply coming from the Continent? In such an event, who would pick up the duty of continuation after a supplier had pulled out, and how would that duty be notified? I beg to move.

9.15 p.m.

Baroness Miller of Chilthorne Domer: My Lords, I appreciate the tabling of these amendments, which would clarify the situation. I hope that the Minister will give a good explanation because the system appears, as the noble Baroness said, to be very convoluted. It is one of the most impenetrable parts of the Bill.

Baroness Farrington of Ribbleton: My Lords, I feel rather inclined to agree that it is one of the more complex parts of the Bill. Amendment No. 143 deals with strategic supply and special administration as they apply to licensees. Its effect is to leave customers without the protection offered by special administration. The special administration provisions will protect customers from the failure of a licensee where the licensee's introduction of water to the undertaker's network is too large for the undertaker to make up the shortfall. Such significant introductions of water into the network will be designated as strategic supplies. If a licensee were to fail financially or be at risk of losing its licence, Ofwat or the Secretary of State can apply to the High Court to put the licensee into special administration.

The special administrator would aim to continue the strategic input of water and to transfer it as a going concern to another supplier. The special administrator may either sell the contract for the provision of the supply to an undertaker or a licensed water supplier, depending upon who they decide is most suited immediately to take over the running of the strategic supply while providing a return to shareholders and creditors.

The special administrator is appointed by the court. It considers who should be sold the contract for the supply. It could be an undertaker or a licensee with the approval of the Secretary of State or Ofwat. Supplies will be considered strategic only where, without them, the undertaker could not fulfil its obligations to supply customers.

24 Jun 2003 : Column 239

On Amendment No. 144, at present undertakers have a duty to supply customers outside their area for domestic purposes but not non-domestic purposes. We have sought to make the duty consistent for all supplies in that regard. The duty to supply will in the future also apply outside the undertaker's area only to customers who are not eligible for supply by a licensed water supplier. Undertakers will be allowed to compete outside their area only through their associated companies. That ensures that there is a clear boundary between the activities of the regulated undertaker and its associated company.

On the question about the boundary between England and France, I shall write to the noble Baroness. I shall return to the matter in a moment. The non-domestic duty is further qualified; it will not apply if in making that supply and supplying all other customers, the undertaker would incur unreasonable expenditure. I hope that that satisfies the noble Baroness in relation to that amendment.

I turn to Amendment No. 145, which would make the duty on the undertakers to provide an interim supply, under new Section 63AC, conditional on the relevant undertaker being aware that a supply from a licensed water supplier had ceased. The effect of that would be to stop the undertaker being able to charge for water that it had unknowingly supplied. We feel that that would not be equitable. We believe that the amendment was tabled in order to protect undertakers from being obliged to provide a supply, without notice, to customers whose licensed supplier failed them. In fact, the provisions are there for the protection of undertakers and customers as well.

If a licensee fails to supply its customer, water will still continue to flow out of the undertaker's pipes at the customer's premises. This provision ensures that whether or not the undertaker is aware that the licensee had stopped making a supply, it is able to recover charges from a customer for the water supplied; it does not depend on the customer informing him.

The customer is protected because, from the time of the licensee's failure, it has at least three months to make alternative arrangements for supply, either by another licensee or by the undertaker. After this period, the undertaker can choose to serve a disconnection notice if no other arrangements have been made. The undertaker is not required to maintain a standby water supply equivalent to the total supplied by the licensees in its area. It will be required to make an interim supply only for domestic needs, unless it has enough water to supply for other purposes.

I tried, with some difficulty, to bring together three amendments that I am delighted were grouped together. If I have failed to answer any of the questions that have been raised, because, as the noble Baroness, Lady Byford, recognised, the matter is extremely complex, I shall be delighted to write to all noble Lords who have taken part.

24 Jun 2003 : Column 240

Baroness Byford: My Lords, I am grateful to the Minister. I apologise to the House that I linked the amendments. The House may be grateful that I did, but it was an error. Unfortunately I had not looked at my master list. At this stage of the proceedings I should like to read carefully the response given by the Minister. I am still unsure why associates have to be used, as opposed to their own companies. I would be glad of further clarification. I beg leave to withdraw the amendment.

Amendment, by leave, withdrawn.

[Amendments Nos. 144 and 145 not moved.]

Lord Whitty moved Amendment No. 145A:

    Page 196, line 45, at end insert—

Next Section Back to Table of Contents Lords Hansard Home Page