Water Act 2003 (Consequential and Supplementary Provisions) Regulations 2005

rose to move, That the draft regulations laid before the House on 8 June be approved [First Report from the Joint Committee]. The noble Lord said: My Lords, with the leave of the House, I shall speak at the same time to the Water Supply Licence (Modification of Standard Conditions) Order 2005. The Water Act 2003 introduced a number of changes to the Water Industry Act 1991. Among these was the introduction of new provisions for competition in the   supply of water services to large users of water. The Government believe that the properly managed development of competition in the water industry in England and Wales should lead to greater efficiencies, keener prices, innovation and better services, to the benefit of customers. To that end, and following extensive consultation, the Water Act 2003 amended the Water Industry Act 1991 to enable licensed water suppliers to access water undertakers’ supply systems in order to supply water to large non-household customers. The Government, together with the Welsh Assembly Government and Ofwat, have been working closely with industry stakeholders, including prospective licensees and customers, on preparations for the implementation of the new regime. Prospective licensees will be able to apply to Ofwat for a water supply licence from 1 August 2005. Large water users that are occupying eligible premises with an annual water consumption of not less than 50 megalitres, will, from 1 December 2005, be able to switch to a licensee for their water supply. The licensees will be bound by conditions determining rights and obligations similar to those applied to statutory water undertakers through their instruments of appointment. Those conditions will be prescribed by the Secretary of State, after consulting the National Assembly for Wales, in the form of standard conditions in water supply licenses. The Director General of Water Services will be able to propose amendments to standard conditions by individual agreement or by a process of collective modification, without the need to obtain the agreement of each individual licensee. Ultimately, if he is unable to   obtain agreement he may refer the proposed modification to the Competition Commission to take a view on whether the amendment would be in the public interest. However, certain conditions must be satisfied before an amendment may be made under the collective modification procedure. Following public consultation and input from stakeholder advisory groups, this order prescribes the percentages that apply to those conditions. The consultation sought views on the detailed policy proposals for collective modification of standard licence conditions. Some 34   stakeholders were invited to comment on the collective modification proposals and 18 of those provided individual responses. One of the conditions that must be satisfied before collective modification may proceed is that specified percentages of licence holders, by number or by market share, do not object to the modifications. The order provides for the percentage in both cases to be 20   per cent and for market share to be assessed by reference to volume of water supplied to premises based on historical data from the last 12-month period. We believe that the threshold is low enough so that if a significant proportion of licensees objects, the modification would not proceed; but not so low that they give undue power to any licensee to block proposed modifications agreed by the majority of licensees. Until now I have been discussing the modification order, so I turn now to the first of the instruments before the House, the consequential and supplementary provisions regulations. These make a number of changes to both primary and secondary legislation to give full effect to the introduction of the new water supply licensing regime, the establishment of the Consumer Council for Water and abolition of the Ofwat Customer Services Committees, the establishment of the Water Services Regulation Authority, the transfer of functions to the authority and the abolition of the office of the Director General from 1 April 2006. The regulations make amendments and supplementary provisions to water and sewerage undertakers’ conditions of appointment and to the Water Supply (Water Quality) Regulations 2000 and 2001 to take account of the establishment of the Consumer Council for Water. They amend the Water (Meters) Regulations 1988 so as to take licensees outside the regime, since issues about the accuracy of meters used by licensees to charge their customers will be a matter for the contracts between them. They disapply the provisions of the Food Safety Act 1990 to water supplied by licensees, as water quality will be subject to the requirements of the Water Supply (Water Quality) Regulations 2000 and 2001. Further, they disapply regulations prescribing guaranteed standards of service in respect of licensees, which are more appropriately a matter for licensees’ contracts with their customers. They also ensure that regulations governing water fittings, undertakings about water quality and some requirements of water quality regulations are applied to licensed water suppliers. This establishes the general and important principle of ensuring appropriate protection of drinking water quality to protect public health, regardless of whether supplies are provided by water undertakers or licensed suppliers. Finally, in Part 2 and Part 4 of the regulations, amendments and supplementary provisions are made in various statutory instruments and in water and sewerage undertakers’ instruments of appointment. These are simply to reflect the setting up of the Water Services Regulation Authority and the Consumer Council for Water which are replacing the office of the Director General of Water Services and the customer service committees. I beg to move. Moved, That the draft regulations laid before the House on 8 June be approved [First Report from the Joint Committee].—(Lord Bach.)