Detail
RAPID commissioned NERA Economic Consulting to conduct a study into the role of contract design in promoting the efficient bulk trading of water in England and Wales. The study focuses on the trading of bulk supplies between incumbent water utilities. RAPID has asked that NERA evaluate the potential role for standardisation of contracts to support efficient bulk transfers. RAPID has also asked that NERA identify recommendations in relation to two important aspects of contract design in this study: ▪ The pricing of water transfers to promote efficient trade and infrastructure development, as parties will only trade when exchanges take place at a price above the supplier’s costs of fulfilling the trade, and below the buyer’s costs to obtain water from an alternative source; and ▪ The mitigation and allocation of risks in the contract such as the uncertain ability of the seller to deliver water as agreed in the contract, variation in water quality, or environmental risks associated with the transfer.