Menu

Water Act 2014 receives Royal Assent

Close-up of waves on water Print publication

29/05/2014

The Water Act 2014 (the Act) received Royal Assent on 14 May 2014, bringing important changes to water industry operation and management of water resources; increasing current environmental regulation requirements; introducing measures to stimulate a free market in the sector; and establishing the framework for the forthcoming residential flood reinsurance scheme (‘Flood Re’). While a number of the Act’s provisions focus on increasing sectoral competition and responding to consumers’ needs – and so are likely to receive the most initial public interest – the practical and commercial implications should not be ignored by property owners, occupiers and developers with an interest in relevant land.

In the main, the Act amends the Water Industry Act 1991 (the WIA), but also impacts on other associated legislation. Adoption agreements under WIA are one element affected. Water and sewerage undertakers have previously been free to enter into agreements to adopt water mains and service pipes, or sewers, drains or sewage disposal works at a future date, provided they are constructed in accordance with the agreement – as per section 51A and section 104 of the WIA respectively. However, going forward, it will also be possible for the Water Services Regulation Authority (Ofwat) to order an undertaker to adopt relevant mains, pipes and infrastructure. Provided Ofwat is satisfied that (a) it is appropriate for the applicant to carry out the initial work rather than the undertaker themselves, and (b) it is not possible for an adoption agreement to be reached between the parties in a reasonable time, it will issue an order for adoption in accordance with specified terms and conditions. This provides a potentially useful mechanism for landowners and developers, where previous adoption requests have been ignored or refused.  However, the statutory language leaves it unclear whether this can also be applied to sustainable drainage systems (SUDS) and other less traditional infrastructure for foul water management.

Ofwat’s powers in relation to section 51A and section 104 agreements are also increased so the regulator can:

  • make an order to vary or terminate an agreement, on the application of a party to the document;
  • issue codes and guidance relating to agreements;
  • stipulate the procedure to be followed where minor or urgent revisions are necessary; and
  • establish the charges that can be imposed by the relevant undertaker when entering into a section 51A or section 104 arrangement.

Sewerage undertakers will now have the right to build and maintain SUDS, provided they are intended to improve the management of surface water entering the public sewers – be this by reducing the overall volume or slowing entry rates. This right exists vis-a-vis both an undertaker’s own land or land belonging to someone else. Developers and landowners already face considerable burdens where construction works are such that the proposed drainage system falls under the SUDS approval regime. The regime can necessitate additional lead time; setting aside of suitable SUDS land; heightened costs for the approval application, non-performance bond and ongoing maintenance; and potentially restricts subsequent alteration or removal of SUDS. That an undertaker now also has its own independent SUDS rights on third party land may bring added complications and difficulties.

In addition, a significant potential change comes with the Secretary of State’s new power to make regulations for certain licences and consents being regarded as environmental permits (EPs) under current EP provisions. Water abstraction licences, water impounding licences, fish passes/screen requirements, and flood defence consents would all be incorporated within the existing EP regime. It is to be hoped the Government acts promptly to introduce such regulations, taking into account the likely benefits in terms of simplifying the existing permitting procedure, avoiding duplication, and enabling various activities to be covered by a single permit (where appropriate).

In addition to its increased powers mentioned above, Ofwat is placed under a new duty via section 22 of the Act to “further the resilience objective”. In essence, this means the regulator must secure:

  • the long-term resilience of water supply and sewerage systems against environmental pressures, population growth and changing consumer behaviour;
  • action from undertakers to ensure the above;
  • suitable long-term planning and investment from relevant undertakers; and
  • undertakers’ commitment to measures to manage water in a sustainable and efficient way, reducing demand for and pressure on existing resources.

The impact this is likely to have on undertakers and, in turn, landowners, occupiers and developers will only become apparent in the longer-term.

The Act enables the government to implement some of the proposals for future operation of the water sector and management of water resources that were outlined in the Department for Environment, Food and Rural Affairs’ White Paper (‘Water for Life’) published in December 2011. Exactly when a number of the Act’s provisions, such as Ofwat’s increased powers, will come into force is still to be decided. In some instances, further consultations will be required before changes are made and the effects are felt. It remains to be seen whether the Act will ensure improved innovation, efficiency, and sustainability in the management and control of water resources as intended.

Contacts