Development of the regulatory and commercial framework

RAPID has established three working groups with fellow regulators and the industry to develop thinking on areas of the regulatory and commercial framework for strategic water resource solutions. These working groups are advisory only, and will not limit broader consultation on these issues.

The areas covered by the three working groups are as follows:

Working group one – Standardisation: to develop published, standardised contract terms to reduce the transaction costs of organising new water trades, and promote best practice in agreements. The contract terms may be used in bulk supply agreements, and potentially other contracts (between water companies and third parties).

Working group two – Pricing, incentives and risk: the allocation of risk between parties and the pricing provisions are pivotal to ensuring that parties have incentives to trade when it is economically efficient to do so. This working group is considering the structure of pricing, the existing trading incentive mechanism and potential gaps and issues with incentives, and how different commercial models can accommodate multi-party and multi-sector projects.

Working group three – Co-ordinated operations: co-ordinated management of water will be essential to the successful operation of strategic water resource solutions. This working group, supported by the Baringa Mott-MacDonald consultancy study on how water resources decision making might be co-ordinated to deliver the best outcomes for customers, the environment and wider society, is to identify barriers to co-ordinated operations involving two or more companies and to determine immediate and longer term actions that may be needed to overcome them.