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New Connections Charging - Consultation

Press release
New connections
10 April 2017
House building

Water UK has launched a consultation on the implementation of the rules adopted by Ofwat in December 2016 on charging for “new connections”. This is a term which covers the infrastructure provided by water companies for new development.

The new rules adopt a principles based approach to new connections charging and replace the complex and much criticised requirements of the Water Industry Act.

While water companies welcome the move from the previous, prescriptive approach, they recognise that the freedom for each company to adopt its own approach could disadvantage developer customers and other providers of infrastructure such as Self Lay Providers and inset appointees. The inefficiencies of having to deal with very differing approaches to charging and even from the use of different terminology could be considerable and could negate some of the advantages of increased simplicity and transparency offered by the new rules.

During the consultation which Defra organised in the lead-up to the introduction of the new rules, Water UK therefore offered to explore the extent to which unnecessary differences between companies’ charging schemes could be minimised. This role was acknowledged by Ofwat in the Decision Document it adopted to accompany the adoption of the new rules.

The consultation document launched today therefore seeks consultees’ views on a wide range of issues relating to the implementation of the new rules, ranging from a proposal for a common quotations framework to the comparative merits of different approaches to charging.

A report on the outcome of the consultation will be compiled by independent economics consultancy Reckon and will be published on the Water UK website. The report will provide valuable guidance to water companies as they move towards consulting their own customers on their proposed approaches to implementing the new rules. At that stage, we anticipate that companies will be able to provide more information about the financial implications for various types of development of their approach to the implementation of the new rules. One element of the consultation document is a suite of tools which will allow a simplified, consistent approach to comparisons of charging before and after implementation of the new rules.

The consultation closes on 8 May and companies are due to implement the new rules in April 2018.

Main consultation:

New Connections Charging - A Water UK Consultation

Appendices:

Water UK Communications
0207 344 1805