Draft Water Bill published

On 10 July 2012, Caroline Spelman, the Secretary of State for Environment, Food and Rural Affairs, published a draft Water Bill for parliamentary scrutiny. The draft Bill takes forward legislative proposals set out in the Water White Paper published in December 2011. The Government aims to introduce the proposed market reforms by 2017.

Key proposals in the draft Water Bill are as follows:

Expansion of the current water supply licensing regime and introduction of sewerage licences

The Water Bill amends the Water Industry Act 1991 to expand the current water supply licensing regime and unbundles the combined water supply licence into several different types that would allow for specific services to be authorised. This is intended to encourage new entrants to apply for particular services e.g. a "wholesale authorisation" would allow a new entrant to input water into an undertaker's water supply system. The new licensing regime would also allow for services to be offered under a national licence rather than on a site by site basis.

Similar types of authorisations have been introduced for sewerage services under a new sewerage licence. The new sewerage licences consist of the following types of authorisation: (a) retail; (b) wholesale; (c) retail infrastructure; (d) wholesale infrastructure; and (e) disposal.

The Welsh Ministers are given separate powers in relation to the areas of water in Wales and for sewerage undertakers wholly or mainly in Wales. For licensees using the supply system of an undertaker wholly or mainly in Wales, the existing retail and supplementary authorisations are retained as: "a restricted retail authorisation" and "a supplementary authorisation" respectively.

Removes threshold for switching water suppliers

The Bill removes the threshold at which businesses and public sector bodies in England can switch suppliers (currently five million litres a year). The Government has said that this is intended to allow all businesses and public sector bodies in England to be able obtain more competitive prices, improve their efficiency and tender for services tailored for their individual needs.

The licensed water supply threshold is to be retained at 50 million litres a year for water companies that operate wholly or mainly in Wales. This may be changed by the Welsh Ministers in due course.

A joint retail market with Scotland

Further to the proposals set out in the Water White Paper, the Bill introduces the ability for English (and...