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Letters to Regulatory Directors
RD 33/03 11 September 2003 Dear Regulatory Director HOW WE DO OUR JOB – A CODE OF PRACTICE GOVERNING THE DISCHARGE OF OFWAT'S FUNCTIONS On 31 March 2003 we consulted on our code of practice governing the way in which we discharge our functions in order to improve stakeholders' understanding of how we operate. We thank everyone that responded and commented on the draft code. We received eighteen responses to the consultation paper and our revised code of practice reflects many of the comments made. Overwhelmingly there was support for a code setting out our overall approach and the framework of principles we follow in making our decisions. A copy of our code is practice is attached. A number of respondents sought guidance within the code on items included in the Water Bill, such as the move from a single Director General to a Water Services Regulation Authority (the Authority) and how it will operate. The code is based on our current constitution and duties and only reflects those. We cannot anticipate how the Authority will operate, but are committed to a smooth transition. We expect the Authority to adopt the broad principles in the code, but that will be a matter for the Authority. Respondents also suggested that paragraph 8, in which we suggest that our commitment to the code cannot be absolute, should be omitted. However, we have retained this as a circumstance may arise that is so exceptional that we may be forced to act in a way that does not fully allow us to meet the principles in the code. We are not aware of any exceptions that have arisen to date, but do not wish to exclude the possibility, in exceptional circumstances, of not following the code where this may better serve the interests of a company or customers. Others suggested that more should be done to ensure better co-ordination between regulators, citing a lack of joined up regulation; insufficient commitment from quality regulators to adhere to Ofwat's timetable for the price review; and the need for a long-term vision for the industry. Not all of these are matters for the code. We have, however, developed the section on co-operation and how we aim to work with others. The Water Bill now includes a clause to secure more co-operation. We are committed to working productively with others, but must maintain our regulatory independence. We have included additional sections in the code of practice on how we strive to achieve value for money and the account we take of customer research in response to respondents' comments. We have also reflected our environmental duties in the code. The predictability of our decisions and the importance of this principle for stakeholders, and particularly investors, was raised. We have set out our aim to make decisions on a "no surprises" basis and to be consistent. Recognising that our policies and methodologies will evolve in the light of experience or changed circumstances. Another issue that was raised by a number of bodies is the speed of Ofwat's decision making, as delays can put companies under pressure when they are trying to meet deadlines imposed by us. They suggested the code of practice should include a commitment to build response times into all our consultation timetables. The code now states that we will make every effort to make our decisions in a timely fashion and set out the timeframes within which we will make our decisions. The code does, however, recognise that there are some cases where the complexity of the issue may mean a decision cannot be arrived at quickly. This code of practice will apply until the new Authority is established which will be after April 2005. Once the Authority is established we expect it to issue a code of practice, which reflects the requirements of the new Water Bill. Yours sincerely Tony Smith Director of Consumer Affairs and Competition  |
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