💧 Water (Special Measures) Bill [ Lords ] (Third sitting)

• Automatic Penalties for Water Companies: The Water (Special Measures) Bill introduced automatic penalties for specific minor to moderate offenses by water companies. This measure is intended to improve compliance across the water sector by enabling quicker imposition of fines without extensive investigations.

• Abstraction and Impounding Licences: The Bill grants the Secretary of State and Welsh Ministers the power to introduce conditions for water industry abstraction and impounding licences, to ensure automatic penalties can be applied and to harmonize standards.

• Regulatory Consideration of Climate Change: The Bill requires Ofwat, the water industry regulator, to consider climate change and environmental targets in its regulatory decisions. However, there was debate over allowing Ofwat discretion in applying this duty.

• Funding for Environmental Regulators: The Bill allows the Environment Agency and Natural Resources Wales to recover enforcement costs from water companies, reducing the burden on taxpayers.

• Drinking Water Inspectorate: The legislation enables the Drinking Water Inspectorate to recover costs for security and emergency work fully, and introduces more equitable fee structures for water companies.

• Special Administration Regime: Clauses related to special administration were debated intensely, particularly regarding who should bear the costs of a company’s financial failure. The Government’s position is that costs incurred during special administration could be recovered from consumers if necessary, while opposition parties argued that creditors should bear these costs.

• Winding-up Petitions: The Bill mandates that the Government and Ofwat must be notified and allowed to be heard in court proceedings related to winding-up a water company, to protect public interest.

• Implementation Timeline: There was discussion on whether all provisions of the Bill should be implemented immediately upon passing. The Government opted for staggered implementation to manage costs to consumers, while opposition parties pushed for faster action.

• Water Restoration Fund: An amendment to establish a Water Restoration Fund, using fines from water companies for environmental restoration, was proposed but not adopted. The Government stated a similar fund already exists and does not require legislation.

• Customer Bill Reductions: An amendment proposing that fines imposed on water companies result in equivalent bill reductions for customers was debated. The Government did not support this, and the amendment was not passed.

The session displayed moderate disagreement, primarily centered around amendments and new clauses proposed by the opposition. The main contention was around the accountability of water companies, particularly in terms of financial penalties and their impact on consumers. The proposed amendments and new clauses sought to protect consumers from bearing the financial burden of water company fines and to ensure environmental restoration, as seen in the discussions on new clauses 1, 2, and 3. However, the government resisted these amendments, arguing for flexibility in managing fines and the necessity of existing mechanisms for special administration. While there was disagreement on these points, the overall session was characterized by a professional and somewhat cooperative atmosphere, with amendments being withdrawn after debate without any significant escalation of tensions. The disagreement was evident but controlled and focused on policy specifics rather than broader ideological differences.