Following last week’s announcement of an Independent Commission into the water sector and its regulation, Defra has published the Terms of Reference.
The government says the “sector should become one of growth and opportunity, which will restore our rivers, lakes and seas to good health, deliver a resilient and efficient water supply in the face of a changing climate, and ultimately ensure that the water sector works for customers and the environment”.
Photo credit: Chris Boland
The stated objective of the commission is to make recommendations to the UK government and Welsh Government to ensure that the water sector regulatory framework delivers the following outcomes:
- Ensure the water industry has clear objectives for future outcomes and a long-term vision to support best value delivery of environmental, public health, customer and economic outcomes.
- Ensure there is a strategic spatial planning approach to the management of water across sectors of the economy, tackling pollution and managing pressures on the water environment and supply at a catchment, regional and national scale. This approach should recognise the cross-border challenges that water can present.
- Ensure the water industry regulatory framework delivers long-term stability and enables the privatised water industry to attract investment, maintain resilient finances and contribute to economic growth.
- Rationalise and clarify requirements on water companies to achieve better environmental, customer, economic and financial outcomes.
- Ensure water industry regulators are effective, have a clear purpose and are empowered to hold water companies to account, with a ‘firm but fair’ approach and earned autonomy for companies that perform well. It should consider transparency, predictability and accountability of regulatory decisions and performance. It should also clarify regulators’ relationships with Parliament and both the UK government and Welsh Government, and consider how the regulators interact, including across borders.
- Improve the industry’s delivery capacity, including the supply chain and consideration of how to drive innovation.
- Protect the interests of consumers, including vulnerable and non-residential customers, and ensure affordability. Companies’ governance and decisions should be honest, transparent and fair, in order to deliver outcomes and value both for the environment and consumers. They should take account of the interests of customers, the public, and those who interact with and enjoy the water environment, and help to rebuild public trust in the water sector.
- Ensure water companies are operationally, as well as financially, resilient and that they can deliver resilient and secure infrastructure within agreed timeframes and maintain it for the long term. This should include anticipating and investing to provide for future changes such as planned development and climate change.