UK: Water E-News, December 2011

Last Updated: 12 December 2011
Article by Lee Tearle and Paul Thompson

NOVEMBER REVIEW

Key items to note include:

  • Water White Paper
  • Publication by EA and Ofwat of report on abstraction licensing changes
  • Draft Water Supply Threshold Regulations laid
  • Tackling Summer Drought begins now
  • Anglian Water granted drought permit; South East Water applies for a drought order whilst Thames Water switches on its drought busting acquifers
  • Veolia to sell off its UK water undertakings
  • Ofwat consults on price limit frameworks and charging for new connections
  • A single Environment Body for Wales

Viewpoint

We have delayed our December newsletter in the hope that the long awaited White Paper would indeed come out and now it has. At first glance, no great surprises but some clarification as to the Government's intended stance at last!

Investors will be encouraged by the decision to abandon structural reform and the timetable for the more piecemeal evolutionary approach should give everyone a proper opportunity to evaluate its impact and the new opportunities it is intended to provide. Assuming however that lessons have been learnt from the failure of the WSL regime in its current form, the new model plus an updated and extended inset regime could well stimulate real interest and bring in many new players. Companies will need to follow the changes in the future Water Bill very carefully therefore to be fully prepared to respond to them.

Investors will also be encouraged by the proposed new two-tier referral system for mergers which should at long last give some relief from the automatic Competition Commission inquiry system that has restricted consolidation in the industry for so long.

Finally, much on abstraction reform - as expected and quite long term with a speed up on existing commitments for dealing with the accumulating debt pile, plus a promise of new ideas. Together with the White Paper, the joint Environment Agency and Ofwat paper published the day before will repay careful scrutiny.

So overall, a conservative approach for a conservative industry.

We will report on reactions to the White Paper and developments on it more generally in early January. Have a great Christmas.

GENERAL

A single Environment body for Wales

Wales is to benefit from one single environment body that will ensure the most sustainable and effective management of its natural resources. This was the message from Environment Minister, John Griffiths who has agreed to the Environment Agency Wales (EAW), the Countryside Council for Wales (CCW) and Forestry Commission Wales (FCW) being brought together into one organisation from 1st April 2013.

http://wales.gov.uk/newsroom/environmentandcountryside/2011/111129body/?lang=en

Environment Agency moves to manage scarce water supplies across eastern England

The Environment Agency has said that dry weather conditions and low water levels remain a concern across England and drought continues to affect many regions moving into winter. The Environment Agency is also pressing water companies in affected regions to step up their campaigns to encourage their customers to use less water. Companies that apply to use for drought permits must show that they are doing everything possible to reduce water demand including implemented water saving campaigns and reducing leakage.

http://www.environment-agency.gov.uk/news/135296.aspx?month=11&year=2011

Tackling a summer drought begins now

Water companies and the public need to plan now for a summer drought to minimise the impacts of a potentially dry winter, Environment Secretary Caroline Spelman announced on 1 December.

http://www.defra.gov.uk/news/2011/12/01/tackling-summer-drought

http://www.bbc.co.uk/news/science-environment-15972810

Anglian Water granted drought permit; South East Water applies for a drought order whilst Thames Water switches on its drought busting acquifers

Anglian Water has been granted a drought permit after the driest spring in East Anglia for 80 years. The Environment Agency has confirmed that the firm could extract extra water from the River Nene, in Northamptonshire, to replenish the half full Pitsford Reservoir.

Meanwhile - South East Water has applied for a drought order to help refill a reservoir supplying more than 65,000 homes across East and West Sussex. The levels of usable water at Ardingly Reservoir are at 12% after the drought affecting parts of England since June.

Finally, Thames Water has urged its 8.8m customers to use water wisely as it boosted supplies by 'switching on' a back-up network of underground aquifer storage for the first time since the 2006 drought

http://www.bbc.co.uk/news/uk-england-northamptonshire-15922498

http://www.bbc.co.uk/news/uk-england-sussex-15982208

http://www.thameswater.co.uk/cps/rde/xchg/corp/hs.xsl/14970.htm

Drought Prospects Report

The Environment Agency has published its drought prospects report which gives an early indication of the prospects for water resources through winter 2011 into spring 2012. The report describes potential rainfall scenarios and recommends actions for the Environment Agency, farmers, water companies and other abstractors. It confirms that the Environment Agency will continue to work with all of its partners to minimise the impact of drought on people, farming, businesses and the environment.

http://www.environment-agency.gov.uk/research/library/publications/131328.aspx

http://www.environment-agency.gov.uk/static/documents/Leisure/Drought_risk_map.pdf

Cambridge Water consults on drought plan

Cambridge Water published its drought plan on 2 December, which is open for consultation until 3 February 2012.

http://www.cambridge-water.co.uk/customers/drought-plan

Veolia to sell UK water companies

Veolia, the French utility giant, plans to sell €5bn (£4.3bn) of assets, including its three UK-regulated water companies. The company's UK water operations – Veolia Water Central, Southeast and East – together serve more than 3m people. Veolia has owned them since 1987 but they remained known, until 2009, as Three Valleys Water, Tendring Hundred and Folkestone & Dover. The companies have a combined turnover of £269m. At the time of writing, this announcement whilst widely reported in the press does not appear to feature on Veolia water company websites.

http://www.telegraph.co.uk/finance/newsbysector/utilities/8938965/Veolia-to-sell-UKwater-companies.html

http://www.ft.com/cms/s/0/5d965846-2029-11e1-8462-00144feabdc0.html?ftcamp=rss

Fisheries Minister meets EU Commissioner

to resolve "days at sea" cuts On 5 December Fisheries Minister, Richard Benyon, joined Richard Lochhead and Michelle O'Neill to meet EU Fisheries Commissioner, Maria Damanaki, ahead of crucial annual fisheries negotiations. Discussions will continue at the Fisheries Council on 15 and 16 December.

http://www.defra.gov.uk/news/2011/12/05/richard-benyon-meets-eu-commissioner-toresolve-days-at-sea-cuts

Fishermen trial technology to protect marine habitats

Trials show that new technology is allowing South West fishermen to continue to fish in their local area while protecting the marine habitats in Lyme Bay. The news was revealed by Environment Secretary Caroline Spelman and Fisheries Minister Richard Benyon who visited a group of fishermen in West Bay, Dorset.

http://www.defra.gov.uk/news/2011/12/01/fishermen-technology-trials

Chairs appointed for Canal and River Trust Waterway Partnerships

The Canal & River Trust, the new waterways charity that will become the guardian of the canals and rivers in England and Wales in April next year, has appointed chairs to a number of the Waterway Partnerships that will play a role in the management of canals and rivers across the network.

http://www.britishwaterways.co.uk/newsroom/all-press-releases/display/id/3236

Majority of England's bathing waters meet strict quality standards

A huge majority of England's bathing waters continue to meet rigorous quality standards, new figures from Defra reveal. Nearly 80 per cent of England's bathing waters met the tightest guideline standard with close to 98 per cent meeting the European Commission's minimum water quality threshold in 2011.

http://www.defra.gov.uk/news/2011/11/08/majority-of-englands-bathing-waters-meetstrict-quality-standards

Survey reveals people would save pets over gadgets in a flood

And finally, the results of a survey carried out by the Environment Agency confirms that we are a nation of pet lovers and that people would rescue their pets ahead of expensive gadgets or sentimental photos from their home before it flooded.

http://www.environment-agency.gov.uk/news/135088.aspx?page=3&month=11&year=2011

REGULATORY

EA and Ofwat set out case for abstraction licensing changes

Immediately ahead of the White Paper, the Environment Agency and Ofwat published on 7 December a report – "The case for change: reforming water abstraction in England" – which sets out their evidence for the need to reform water abstraction management. Acting together now, they say, "will ensure enough good quality water for a healthier water environment and secure supplies of water for people, businesses and agriculture in the longer term. We look forward to continuing to work with the UK Government to make the commitments in the Water White Paper a reality".

http://www.ofwat.gov.uk/future/markets/waterrights/prs_web20111205abstraction

http://www.ofwat.gov.uk/future/markets/waterrights/pap_pos20111205abstraction.pdf

Draft Water Supply (Amendment to the Threshold Requirement) Regulations

These Regulations amend section 17D(2) of the Water Industry Act 1991 so as to reduce the threshold level for water supply to specified premises from 50 megalitres to 5 megalitres. The threshold is the minimum quantity of water estimated to be supplied annually to any premises by a licensed water supplier. A licensed water supplier may not enter into an undertaking with a new customer to supply water to their premises unless the threshold requirement is satisfied. They are subject to affirmative resolution in each House of Parliament (see report on statutory instruments below).

http://www.legislation.gov.uk/ukdsi/2011/9780111516478/data.pdf

Reappointment to the Natural England Board

Catherine Graham-Harrison OBE and Andrew Wilson have been reappointed to the Board of Natural England, the body responsible for enhancing and managing the natural environment, by Richard Benyon, Natural Environment and Marine Minister. They are reappointed for a further period of three years from 1 January 2012.

http://www.defra.gov.uk/news/2011/12/02/reappointments-to-the-natural-england-board

http://www.naturalengland.org.uk/about_us/news/2011/241111.aspx

Environment Agency appoints new Director of Flood and Coastal Risk Management

David Rooke, who has over 30 years experience in flood and coastal risk management, has been announced as the Environment Agency's new Director of Flood and Coastal Risk Management

http://www.environment-agency.gov.uk/news/134968.aspx?page=6&month=11&year=2011

Ofwat consults on price limit frameworks

Ofwat, has started a consultation on how it will set price limits in future. The proposals will ensure customers continue to get a fair deal, and that well run, efficient companies can continue to raise finance to improve service to customers. New price limits will be set in 2014.The consultation not only sets out a framework for setting price limits, but also describes how the regulatory approach will develop so the sector can continue to deliver for customers in decades to come. The consultation ends on 15 February 2012.

http://www.ofwat.gov.uk/mediacentre/pressnotices2008/prs_pn0411fpl

Ofwat consults on charging for new connections

Ofwat is consulting on its policy principles for charges for new connections in order to provide greater clarity to stakeholders about the provision of new infrastructure. Having reviewed its existing guidance Ofwat has decided to withdraw its previous guidance. When it publishes its final policy principles for charges for new connections, this will explain how it will make decisions in this area. The consultation ends on 6 February 2012.

http://www.ofwat.gov.uk/consultations/pap_con201111connect.pdf?download=Download

Ofwat – changes to COPI

Ofwat has published an information notice regarding changes to the Construction Output Price Index.

http://www.ofwat.gov.uk/regulating/prs_in1108copi.pdf

Ofwat – Charging principles and guidance

Ofwat has published principles and guidance for water and sewerage service charges.

http://www.ofwat.gov.uk/regulating/charges/prs_web_chargespg_intro

SSE Water applies to Ofwat for a variation to its appointment

SSE Water has published a notice under section (8)(2)(b) of the Water Industry Act 1991 stating that it has applied for a variation to its appointment to be the water and sewerage services provider at a site in Dorchester, called Brewery Square.

http://www.ofwat.gov.uk/competition/inset/proposedinsetapp/prs_web_111125nt0711

POLICY

Water For Life

Published by Defra at last, on Thursday 8 December, Water for Life, the Water White Paper describes, as Defra puts it, a vision for future water management in which the water sector is resilient, in which water companies are more efficient and customer focused, and in which water is valued as the precious and finite resource it is. See Viewpoint for further comment on this above.

The key reforms are highlighted by Defra as follows:

  • Over the long-term we will introduce a reformed water abstraction regime, as signalled in the Natural Environment White Paper earlier this year;
  • We set out changes we can make now to deal with the legacy of overabstraction of our rivers;
  • We re-affirm our new catchment approach to dealing with water quality and wider environmental issues;
  • We will remove barriers to the greater trading of abstraction licences and bulk supplies of water to make our supply system more flexible;
  • With the Environment Agency and Ofwat we will provide clearer guidance to water companies on planning for the long-term, and keeping demand down;
  • We will consult on the introduction of national standards and a new planning approval system for sustainable drainage;
  • We will make payments to address the historical unfairness of high bills in the South West; and
  • We will encourage water companies to introduce social tariffs to support vulnerable customers.

So far as delivery is concerned, Defra says that there are immediate steps for Government to take in implementing this White Paper, particularly:

  • We will publish a draft Water Bill for pre-legislative scrutiny in early 2012 and introduce a Water Bill as soon as Parliamentary time allows;
  • We will produce a new strategic policy statement and social and environmental guidance for Ofwat during 2012;
  • With the Environment Agency, we will support catchment pilots across the country, with particular focus on 25 which will be evaluated in early 2013;
  • We will put in place new arrangements to work with stakeholders on design of a new abstraction regime in early 2012;
  • We will intensify our efforts to deal with the legacy of unsustainable abstraction, publishing information on progress on the Restoring Sustainable Abstraction programme in 2012;
  • We will publish final social tariff guidance in early 2012; and
  • We will produce a draft guideline for the next water resources management planning round during 2012.

http://www.defra.gov.uk/environment/quality/water/legislation/whitepaper

Written Ministerial Statement on Marine Conservation Zones

In a written Ministerial Statement by Richard Benyon on 15 November the Government has confirmed it's commitment to the Marine and Coastal Act and to ensure that it has an adequate evidence base to underpin decisions, Defra will be commissioning significant additional work to support the designation of Marine Conservation Zones

http://www.defra.gov.uk/news/2011/11/15/wms-marine-conservation-zones

Ministerial Statement on the Carbon Plan

The Government published on 1 December its Carbon Plan, setting out the Government's long-term plans to meet its carbon targets, including the fourth carbon budget set earlier this year. The plan shows how doing so will set the country on plausible pathway to its 2050 target to reduce emissions by at least 80% from 1990 levels. The plan will help drive new high-value economic sectors and save billions through energy efficiency.

http://www.decc.gov.uk/en/content/cms/news/wms_carbonplan/wms_carbonplan.aspx

Draft Ports NPS debate in Commons

A short 45 minute debate on the NPS took place on 29 November introduced by the Parliamentary Under-Secretary of State for Transport (Norman Baker). The NPS should have been designated on the 30 November, however, the debate had to be adjourned until a later date; a date has not been announced yet. Therefore, the NPS may or may not be designated this year.

http://www.publications.parliament.uk/pa/cm201011/cmhansrd/cm111129/debtext/111129-0003.htm#11112951000003

Launch of National Strategy for Flood and Coastal Erosion Strategy

The Environment and Sustainable Development Minister, John Griffiths has launched Wales' first National Strategy for Flood and Coastal Erosion Risk Management.

http://wales.gov.uk/newsroom/environmentandcountryside/2011/111114flooding/?lang=en

Transition to the Planning Act as amended by the Localism Act 2011

On 15 November 2011 the Localism Act 2011 received Royal Assent. The Government has confirmed that it will issue a directions to provide a clearer outline of its plans to ensure that major infrastructure cases transfer seamlessly from the Infrastructure Planning Commission to the Planning Inspectorate. The direction is presently being drafted, and will be published in draft form well in advance of the abolition of the Commission to provide all parties with an interest with certainty as to how transition will be handled.

http://www.communities.gov.uk/planningandbuilding/planningsystem/transitionplanningact

NEW CASE LAW

Guidance on who is the 'competent authority' under the Habitats Directive/Regulations where there is more than one authority

R (Cornwall Waste Forum, St Dennis Branch) v Secretary of state for Communities and Local Government and SITA Cornwall Ltd and Environment Agency and Cornwall Council [2011] EWHC 2761 (Admin)

The challenge concerned the failure to undertake an appropriate assessment under regulation 61 of the Habitats Regulations by a competent authority. The case is interesting because there was more than one 'competent authority' and the judgment of Mr Justice Collins provides guidance on the process to be followed in this situation, particularly in the case of overlapping responsibilities and the interaction of the planning and pollution control regimes.

http://www.bailii.org/cgi-bin/markup.cgi?doc=/ew/cases/EWHC/Admin/2011/2761.html&query=cornwall&method=boolean

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