The Department for Environment, Food and Rural Affairs (Defra) has proposed making the resilience of the water industry an explicit duty on Ofwat and the UK and Welsh Government Ministers. The consultation seeking views on the proposal is due to close on 10 May 2013.

The Water Act 1991 contains overarching and supporting duties for the water industry regulator and the Ministers. These currently include protecting the interests of current and future consumers, securing the proper conduct of water companies’ activities and contributing to sustainable development. The proposal is to add to these a new overarching duty of securing long-term resilience through an amendment to the draft Water Bill which is expected to be introduced to Parliament later this year.

Resilience is the ability of English and Welsh water infrastructure to cope with extreme weather events, increases in demand and threats to water quality. This tweak to the policy priorities of Ofwat and the Ministers aims to reshape their focus as they regulate the 22 water and sewerage companies which struggled to cope with the challenging weather conditions of 2007, 2009 and 2012. Defra considers that better resilience could be achieved through, for example, incentivising (or requiring) water companies to improve catchment area management, to increase cooperation and trading between companies and to make additional capital investment in storage and interconnections.

When the duties were discussed in evidence to the House of Commons Environment, Food and Rural Affairs Committee during the pre-legislative scrutiny of the Draft Water Bill in February 2013, Ofwat noted that the stability of the statutory duties of economic regulators is particularly important to investors as well as other stakeholders. However, with this proposal and the number of significant changes which are being introduced in the coming months for the water industry, stability for the sector remains some way off.

Please click here