Ofwat home > Publications > Letters to Managing Directors

MD205

TO ALL MANAGING DIRECTORS OF
APPOINTED WATER AND SEWERAGE COMPANIES
AND WATER ONLY COMPANIES

MODIFICATION TO NEW LICENCE CONDITION R – CONSULTATION

This letter explains the need for changes to your proposed new Licence Condition R and asks for your views on this. We consulted on new Conditions R and S in December 2004 and have since been considering the responses to this consultation and finalising the conditions as appropriate. A new issue has arisen which means that we need to consult again on further amendments to Condition R.

Background

MD201, dated 28 February 2005, reminded you that the new statutory regime for market competition under the amended Water Industry Act 1991 will take effect later this year, and that appointed water companies have new responsibilities under the Act. One of your appointed water company's new responsibilities will be to prepare an access code. We issued our guidance on access codes on 24 June. This sets out the principles and rules that appointed water companies must follow when developing their procedures for allowing water supply licensees to have access to their supply systems.

At the time of the original consultation on Conditions R and S, it was considered that the statutory guidance we must issue under section 66D(4) could include guidance on matters of pure process. As a result, we would be able to exercise the enforcement power in sections 66D(7) and 66D(8) where a licensee and appointed water company had failed to enter into an access agreement as a result of, for example, undue delay on the part of the appointed water company. However, we have subsequently been advised that the wording of section 66D(4) and Condition R (2)(a) are not wide enough to cover matters of pure process and that these parts of our guidance are non-statutory. We therefore propose to amend Condition R to require appointed water companies to comply with the non-statutory parts of the guidance.

Our proposal

The text attached at annex A sets out the proposed new amendments to allow us to enforce all of the guidance on access codes. The text shows the changes to the text that we first issued as part of our consultation in December 2004. We would like your views on these amendments.

If you wish to comment, please send your responses to Sarah Thomas (sarah.thomas@ofwat.gsi.gov.uk) by 11 August. Early responses would be appreciated.

Yours sincerely



Philip Fletcher

Enc.



---

Annex A

MODIFICATION OF THE CONDITIONS OF APPOINTMENT OF WATER AND SEWERAGE UNDERTAKERS IN ENGLAND AND WALES

Parts 2. and 3. of new Condition R

Bold text indicates new words

Strikethrough indicates deleted words

2. ––(1) The Access Code shall –

(a) conform to the guidance for the time being issued under section 66D(4);

and–
(b) set out –

(i) the Appointee's proposed procedure (including timetables) for dealing with a request made to it by a licensed water supplier which makes an application to it under sections 66A, 66B or 66C (which procedure shall itself conform to any relevant guidance);

(ii) the types of feasibility studies which the Appointee will or might may undertake in response to any of those possible applications, including the method of calculation of any costs associated with any such study which the Appointee proposed to use with a view to recovering them from any such applicant (all of which feasibility studies and the method of calculation shall themselves conform to any relevant guidance); and

(iii) the terms (including prices, commencement time and duration of service (including the basis for calculating charges in accordance with the costs principle in section 66E) upon which the Appointee will offer to perform each duty under sections 66A to 66C and indicative charges for performing each duty under sections 66A and 66B (which indicative charges shall themselves be calculated in accordance with any relevant guidance).

(2) In this paragraph and in paragraph 3 below, "relevant guidance" means guidance –

(a) in relation to the matters specified in paragraph (1)(b) above;

(b) for the time being issued by the Authority where –
(i) before issuing such guidance, the Authority has consulted such persons as it considers appropriate; and

(ii) the Authority has published such guidance in such a manner as it considers appropriate for the purpose of bringing it to the attention of persons likely to be affected by it.

3.––(1) Subject to paragraph 2, the Appointee –

(a) shall review its Access Code annually not later than the anniversary of the
date upon which this condition comes into effect; and

(b) may at any time modify revise it.

(2) If the Authority modifies revises its guidance under section 66D(4), the Appointee shall modify revise its Access Code to conform to the modified revised guidance.

(3) If the Authority revises any relevant guidance, the Appointee shall revise its Access Code to conform to such revised relevant guidance, provided that the Authority has –

(a) consulted such persons as it considers appropriate before revising that relevant guidance; and

(b) published that revised relevant guidance in such a manner as it considers appropriate for the purpose of bringing it to the attention of persons likely to be affected by it.