The Department for Environment, Food and Rural Affairs (Defra) has proposed making the resilience of the water industry an explicit duty on Ofwat (The Water Services Regulation Authority) & the UK and Welsh Government Ministers in a new consultation entitled “Updating the general duties with respect to the water industry to reflect the UK Government’s resilience priorities”.
The Water Act 1991 contains overarching and supporting duties for the water industry regulator and the Ministers. These currently include protecting the interests of current and future consumers, securing the proper conduct of water companies’ activities and contributing to sustainable development. The proposal is to add to these a new overarching duty of securing long-term resilience through an amendment to the draft Water Bill which is expected to be introduced to Parliament later this year.
Resilience is the ability of English and Welsh water infrastructure to cope with extreme weather events, increases in demand and threats to water quality. This tweak to the policy priorities of Ofwat and the Ministers aims to reshape their focus as they regulate the 22 water and sewerage companies which have struggled to cope with the challenging weather conditions of 2007, 2009 and 2012. Defra considers that better resilience could be achieved through, for example, incentivising (or requiring) water companies to improve catchment area management, to increase cooperation and trading between companies and to make additional capital investment in storage and interconnections.
When the duties were discussed in evidence to the House of Commons Environment, Food and Rural Affairs Committee during the pre-legislative scrutiny of the Draft Water Bill in February 2013, Ofwat noted that the stability of the statutory duties of economic regulators is particularly important to investors as well as other stakeholders.
A copy of the consultation document can be obtained at http://bit.ly/15do33R