Two Ofwat consultations on water resources 

Consultation on the abstraction incentive mechanism 

The abstraction incentive mechanism (AIM) has the objective of encouraging water companies to reduce the environmental impact of abstracting water at environmentally sensitive sites when water is scarce. We plan to implement the AIM in reputational form from 1 April 2016. Water companies propose abstraction sites for inclusion in the AIM. No water company wholly or mainly in Wales has proposed an AIM site and the environmental information we currently have does not suggest there might be a need for them to do so. We therefore expect the AIM will only apply to water companies wholly or mainly in England. We want the AIM to support:

• our vision for the sector of trust and confidence in water and waste water services
• our Water 2020 programme
• our new resilience duty
• our water trading incentives
• the Government’s planned abstraction reforms
• the Environment Agency’s work to restore sustainable abstraction
• companies meeting the Water Framework Directive’s objectives

We set up an AIM taskforce in April 2015 to develop proposals for the AIM. In this consultation we are seeking views on the taskforce’s proposal for how the AIM will work, the number of abstraction sites companies are proposing to include in the AIM and our proposals for how companies will report on the AIM. 

http://www.ofwat.gov.uk/consultation/consultation-on-the-abstraction-incentive-mechanism/    

Water trading Incentives

At PR14 we introduced water trading incentives to encourage water trading between incumbent water companies. Water trading can benefit

• the environment, by allowing scarce resources to be optimised on a national (rather than regional) level
• customers, as it can allow investment in developing new resources within a region to be deferred, reducing future upward pressures on bills

Companies can only receive the PR14 water trading incentives if they produce, and are compliant with, an approved trading and procurement code. The requirements for the code are set out in Appendix 3 of our final PR14 methodology statement and as part of the approval process we publish their draft code published on our website for comment. Following the conclusion of this consultation period we will approve the code or provide reasons for not approving it within six weeks. This consultation is about a trading and procurement code for Dŵr Cymru. 

http://www.ofwat.gov.uk/consultation/trading-and-procurement-code-dwr-cymru/